The discount of Western Canada Select (WCS) heavy crude to the North American benchmark West Texas Intermediate futures (WTI) continued to narrow on Thursday, as global oil prices saw their steepest fall in three years.
WCS for May delivery in Hardisty, Alberta, settled at $9.10 a barrel under WTI, according to brokerage CalRock, after having settled at $9.40 under the U.S. benchmark on Wednesday.
The differential, which was sitting at higher than $13 a barrel a month ago, has been narrowing since the first week in March. * The market has erased what had been a months-long drag on the relative price of Canadian heavy oil over concerns that U.S. President Donald Trump could tariff energy products from its northern neighbour, said Enverus Intelligence analyst Michael Berger. Trump said Wednesday USMCA-compliant goods from Canada, including oil, would remain tariff exempt. * The remarkably tight WCS discount reflects tighter sanctions on heavy crude-producing countries such as Venezuela, Berger said, as well as lower heavy crude exports from Mexico. * Globally, oil prices swooned on Thursday to settle with their steepest percentage loss since 2022, after OPEC+ agreed to a surprise increase in output the day after U.S. President Donald Trump announced sweeping new import tariffs.
The differential on Canadian heavy crude tends to widen when global oil prices are higher overall and narrow in lower price environments, in part because lower prices mean less competition for pipeline space for Canadian producers.
(Reporting by Amanda Stephenson in Calgary; Editing by Shreya Biswas)