The discount of Western Canada Select (WCS) heavy crude to the North American benchmark West Texas Intermediate futures (WTI) narrowed on Monday, returning to the extremely tight levels it was trading at prior to last week’s shutdown of the Keystone pipeline.
WCS for May delivery in Hardisty, Alberta, settled at $9.10 a barrel under WTI, according to brokerage CalRock, after having settled at $9.60 under the U.S. benchmark on Friday.
* The WCS discount briefly widened last week in the immediate aftermath of an oil spill in North Dakota, which caused Keystone operator South Bow to shut down the 4,327-km (2,689) pipeline from Canada to the U.S.
A line break on the Keystone system would historically have resulted in a rapid deepening of the WCS price discount versus WTI, as crude supplies would back up in Alberta, according to an RBN Energy report.
But this time the price moved only a little more than $1 per barrel, due to low crude storage levels in Canada that have come about due to increased exports on the recently expanded Trans Mountain pipeline, as well as capacity on the Enbridge Mainline, RBN Energy said.
* On Monday, the Calgary, Canada-based South Bow said it was keeping an eye on inclement weather before proceeding with a planned controlled restart of the pipeline. The company said it is targeting Tuesday for full service restoration.
* The WCS discount has been tight so far this spring due to U.S. sanctions on heavy crude-producing countries such as Venezuela, as well as lower heavy crude exports from Mexico.
(Reporting by Amanda Stephenson in Calgary;Editing by Maju Samuel)