Western Canada Select (WCS) crude’s discount to the benchmark West Texas Intermediate (WTI) tightened further on Friday.
WCS for February delivery in Hardisty, Alberta, traded between $24.00 and $22.95 a barrel below WTI, according to brokerage CalRock. On Thursday it traded between $24.90 and $24.80 a barrel under U.S. crude.
Trading volumes were thin as the Canadian market neared the end of its monthly trade cycle, which lasts from the first of each month until the day before pipeline nominations are due.
WCS has strengthened since TC Energy restarted its Keystone pipeline in late December after a leak of 14,000 barrels in Kansas. The heavy grade is also benefiting from increased U.S. refinery demand and Gulf Coast exports.
Analysts at consultancy Tudor Pickering Holt said in a note investors expect the TransMountain pipeline expansion, due to be completed later this year, to help narrow WCS differentials. The expansion project will boost the capacity of the pipeline shipping oil sands crude to Canada’s Pacific coast to 890,000 barrels per day from 300,000 bpd currently.
Global oil prices settled more than a dollar a barrel higher, notching their biggest weekly gains since October, as the U.S. dollar dropped to a seven-month low and more indicators pointed toward growing demand from top oil importer China.
The outright price of WCS was more than $56 a barrel.