Canadian heavy crude’s differential to benchmark West Texas Intermediate (WTI) crude narrowed marginally on Monday.
Western Canada Select heavy blend crude for February delivery in Hardisty, Alberta, last traded at $12.35 per barrel below the WTI benchmark, according to NE2 Canada Inc, having settled at $12.40 per barrel below the U.S. crude benchmark on Monday.
WCS narrowed last week after storage data showed a draw on crude inventories in western Canada.
Longer-term fundamentals for WCS are looking strong. In a note to clients Randy Ollenberger, an analyst with BMO Capital Markets, said declining heavy crude exports from Mexico should lead to U.S. Gulf Coast refiners competing with Midwest refiners for Canadian heavy oil, which would likely drive WCS differentials tighter.
Light synthetic crude from the oil sands for February delivery last traded at 10 cents a barrel below WTI, 10 cents wider than Friday’s settle.
Global oil prices fell as worries about demand stoked by the rapid global rise in Omicron coronavirus infections overtook concerns about oil supply reduction from Kazakhstan.