The discount of Western Canada Select (WCS) heavy crude to the North American benchmark West Texas Intermediate futures (WTI) narrowed on Thursday, continuing a trend of what has been historically tight levels this spring.
WCS for June delivery in Hardisty, Alberta, settled at $9.35 a barrel under WTI, according to brokerage CalRock, after having settled at $9.70 under the U.S. benchmark on Wednesday.
Canadian heavy crude has been trading at a tight discount in recent months in part due to the opening of the Trans Mountain pipeline expansion exactly one year ago. On average, WCS-WTI differentials have narrowed by $4, or 23% over the past year, according to RBC Capital Markets.
The pipeline expansion boosted Canada’s oil export capacity, reducing the price volatility that historically occurred whenever the country’s oil producers ran out of pipeline space.
* Data from the Alberta Energy Regulator shows crude production in Canada’s oil-producing province continues to rise, in spite of ongoing global uncertainty related to U.S. trade policy. The regulator’s most recent figures show Alberta crude production reached a new March record this year of 4.2 million barrels per day, a 3.6% increase year-over-year.
* Globally, oil prices settled nearly 2% higher on Thursday after U.S. President Donald Trump threatened secondary sanctions on Iran after a fourth round of U.S.-Iran talks was postponed.
* Thursday was the start of the Canadian crude market’s trade cycle, which runs from the first of each month until the day before pipeline nominations are due, and in which the bulk of trading activity takes place.
(Reporting by Amanda Stephenson in Calgary; Editing by Shailesh Kuber)