The discount on Canadian heavy crude versus the West Texas Intermediate (WTI) benchmark widened on Tuesday as global benchmark oil prices fell heavily.
Western Canada Select (WCS) heavy blend crude for August delivery in Hardisty, Alberta, last traded at $20.25 a barrel below WTI, according to NE2 Group, widening 50 cents from the previous day.
Moves in the Canadian crude market were overshadowed by a 9% plunge in global benchmark oil prices on growing fears of a global recession and lockdowns in China that could slash demand.
The outright price of Canadian heavy crude fell below $80 a barrel.
Canadian heavy crude has been under pressure in recent weeks due to the U.S. government’s Strategic Petroleum Reserve release, which has flooded the Gulf Coast market with sour crude and is crimping demand for Canadian barrels.
Light synthetic crude from the oil sands for August delivery traded at $10.75 a barrel over WTI, climbing from a premium of $8.90 a barrel over WTI on Monday.
Rory Johnston, founder of the Commodity Context newsletter, said synthetic crude was finding support from strong middle distillate demand in the United States.