The discount on Western Canada Select (WCS) heavy crude versus the North American benchmark West Texas Intermediate (WTI) narrowed on Tuesday. WCS for January delivery in Hardisty, Alberta, settled at $21.50 a barrel under WTI, according to CalRock, having settled at $22.65 a barrel under WTI on Monday.
Market players said WCS sold off sharply from earlier highs, however, after the Canada Energy Regulator denied a variance request for the Trans Mountain Expansion (TMX) project, increasing the risk the 590,000 barrel-per-day pipeline expansion could be delayed.
Canadian heavy crude differentials remain under pressure on concerns the expansion could be delayed beyond the first quarter of 2024.
Potential delays to TMX come as Canadian producers boost supply. Suncor Energy released 2024 capital spending plans on Tuesday and said it would increase production 7% from 2023 levels.
Benchmark oil prices fell to a near five-month low on a stronger U.S. dollar and demand concerns, putting the market down for a fourth day in a row on doubts over OPEC+ announced voluntary supply cuts last week.
The outright price of WCS was just under $51 a barrel.
(Reporting by Nia Williams in British Columbia; Editing by Chris Reese)