Western Canada Select (WCS) heavy crude’s discount to the benchmark West Texas Intermediate (WTI) tightened on Friday.
WCS for June delivery in Hardisty, Alberta, narrowed to $12.80 a barrel under the benchmark, according to brokerage CalRock. On Wednesday the Canadian heavy benchmark ended at $13.10 a barrel under WTI.
Benchmark Canadian heavy crude prices have tightened this week to multi-month highs on concerns about wildfires in Alberta, that forced some producers to shutter production. Although the wildfires have eased in recent days, temperatures are expected to climb over the weekend, raising concerns about further production cuts and evacuations across Canada’s main oil-producing province.
“Everybody is looking at the weather,” said one Calgary-based trader. “There’s a higher probability for more disruption than less (disruption).”
Canadian heavy oil prices have also improved this year relative to WTI due to better egress to the United States and the restart of two Midwest refineries that are big buyers.
Global oil prices settled more than 1% lower, falling for the third consecutive week, as the market balanced supply fears against renewed economic concerns in the United States and China.