Western Canada Select (WCS) crude’s discount to the benchmark West Texas Intermediate (WTI) widened sharply on Thursday after the Keystone pipeline shut down because of a leak:
TC Energy said it had shut its 622,000 barrel-per-day Keystone pipeline, crimping the flow of Canadian oil to U.S. refineries after a spill into a Kansas creek on Wednesday night, and it was unclear how long the closure would last.
WCS heavy blend crude for December delivery in Hardisty, Alberta, traded at $33.50 a barrel under WTI, according to a Calgary-based broker, widening from $27.50 a barrel under the benchmark the previous day.
WCS for January delivery traded at $29 a barrel under WTI before paring losses to change hands at $28 a barrel under the benchmark, according to a broker. On Wednesday, January WCS had settled at $26.45 a barrel under U.S. crude.
The slight recovery in prices suggested traders expect the pipeline shutdown will not last too long.
WCS differentials have been narrowing this week as benchmark U.S. crude prices dive. The tighter discount helped limit the fall in the outright price of WCS, which was last around $45 a barrel.
Oil settled lower for a fifth straight session on the prospect of Keystone resuming service, which would return a hefty amount of crude to the market at a time when global economic slowdowns are raising fuel demand fears. (Reporting by Nia Williams; Editing by Josie Kao)