The discount on Western Canada Select (WCS) heavy crude versus the North American benchmark West Texas Intermediate (WTI) tightened on Wednesday, as commercial operations got underway on the long-anticipated Trans Mountain pipeline expansion (TMX):
* WCS for May delivery in Hardisty, Alberta, traded at $11.75 a barrel below WTI, according to brokerage CalRock, after closing at $12.20 a barrel below the benchmark on Tuesday.
* The Trans Mountain pipeline expansion project (TMX) began commercial operations on Wednesday, and tankers will be able to load at Westridge Marine Terminal in the Port of Vancouver by mid-May.
* TMX nearly triples the flow of crude from Alberta to the Pacific Coast to 890,000 barrels per day.
* Many analysts expect it will help tighten heavy crude differentials to less than $10 a barrel below WTI by removing export pipeline bottlenecks and forcing U.S. refiners to compete with global buyers for Canadian barrels.
* Cenovus Energy reported higher-than-expected first-quarter profit due to increased production and refinery throughput, and executives said the start-up of TMX would open up new markets.
* Global oil prices fell about 3% to a seven-week low on a surprise build in U.S. crude stocks, the prospect of a Middle East ceasefire agreement and as hopes faded for near-term U.S. interest rate cuts that could boost oil demand.
(Reporting by Nia Williams in British Columbia; Editing by Sonali Paul)