Western Canada Select (WCS) crude’s discount to the benchmark West Texas Intermediate (WTI) narrowed on Monday.
WCS heavy blend crude for December delivery in Hardisty, Alberta, traded at $28.60 a barrel under WTI, according to NE2 Inc, narrowing $1.10 from the previous trading day.
However, WCS remains significantly weaker than earlier in the year. The Canadian heavy crude discount to WTI averaged $16.67 a barrel during the first three quarters of 2022.
The WCS discount has pared some losses this month after widening sharply in October to more than $30 a barrel, when it was driven by weak demand for heavy sour grades on the U.S. Gulf Coast, the world’s largest heavy crude refining center.
Factors contributing to weak WCS demand include cheap Russian Urals crude competing with WCS re-exports to Asia, U.S. refinery outages, a global glut of high-sulphur fuel oil and the U.S. Strategic Petroleum Reserve releases that flooded the market with heavy sour barrels.
Global oil prices fell, paring gains after rising to more than two-month highs, on mixed signals over China, the world’s top crude importer, potentially relaxing its strict COVID-19 restrictions.
That put the outright price of WCS at around $63 a barrel. (Reporting by Nia Williams)