The discount of Western Canada Select (WCS) heavy crude to the North American benchmark West Texas Intermediate futures (WTI) widened on Monday.
WCS for May delivery in Hardisty, Alberta, settled at $9.15 a barrel under WTI, according to brokerage CalRock, after having settled at $8.90 under the U.S. benchmark on Friday.
* The market has largely 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. Trump said last Wednesday USMCA-compliant goods from Canada, including oil, would remain tariff exempt. * The tight WCS discount also reflects tighter U.S. sanctions on heavy crude-producing countries such as Venezuela, as well as lower heavy crude exports from Mexico.
* But the differential on Canadian heavy crude also 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. * The probability of a U.S. recession has risen significantly thanks to Trump’s tariffs and that will have a major negative effect on the Canadian economy, Prime Minister Mark Carney said on Monday. * Oil prices slid 2% to a near four-year low on Monday on worries Trump’s latest trade tariffs could push economies around the world into recession and reduce global demand for energy.
(Reporting by Georgina McCartney in Houston; Editing by Maju Samuel)