The discount on Western Canada Select to the North American benchmark West Texas Intermediate futures narrowed on Tuesday.
WCS for August delivery in Hardisty, Alberta, was trading at $10.25 a barrel under the U.S. benchmark WTI, according to brokerage CalRock, compared to $10.30 a barrel on Monday.
* The WCS discount has widened slightly since last month, when concerns about wildfires in Canada’s oil-producing regions led to a temporary tightening. Alberta’s crude oil output dropped to a two-year low in May, said RBN Energy analyst Martin King in a report, due to wildfire curtailments at several oil sands sites as well as more routine maintenance work.
* Canadian heavy crude output should be much higher this month, King said, with wildfire-disrupted output restored in early June and facility turnarounds winding down.
* Pricing for Canadian crude remains historically strong, in part due to the opening of the Trans Mountain pipeline expansion, which boosted the country’s oil export capacity to Asian markets.
* Summer and the return of road construction season are a seasonally strong time of year for Canadian heavy crude, which is used by U.S. refiners to produce asphalt.
(Reporting by Amanda Stephenson in Calgary; Editing by Shailesh Kuber)