The discount on Western Canada Select to the North American benchmark West Texas Intermediate futures narrowed on Thursday.
WCS for September delivery in Hardisty, Alberta, settled at $11.75 a barrel under the U.S. benchmark WTI, according to brokerage CalRock, compared with $11.80 a barrel on Wednesday.
* The differential between Canadian heavy crude and the U.S. benchmark has trended generally wider this month. The completion of maintenance projects at Canadian oil sands sites has boosted heavy crude supply and fall turnarounds at U.S. Gulf Coast refineries are reducing demand.
* It is not unusual to see seasonal weakening in WCS pricing heading into autumn, but this year’s softening comes following months of extremely strong market conditions for Canadian crude, said Rory Johnston, analyst and founder of the Commodity Context newsletter.
* The WCS discount is now approximately $3 wider than it was in late spring, when wildfires temporarily disrupted oil sands supply in northern Alberta and the Canadian crude market saw some of the tightest WCS differentials since 2020.
* One factor behind the recent widening trend is the threat of competition from Venezuelan heavy crude exports to the U.S. Gulf Coast, which are set to resume this month due to easing of U.S. sanctions, Johnston said.
* But the WCS discount remains historically tight. That is largely due to the opening last year of the Trans Mountain Pipeline expansion, which has opened up new export capacity for Canadian oil.
* Globally, oil prices climbed about 2% to a one-week high on Thursday after U.S. President Donald Trump warned of “severe consequences” if his talks with Russian President Vladimir Putin on Ukraine fail, and on optimism that a likely U.S. interest rate cut next month could spur oil demand.
(Reporting by Amanda Stephenson in Calgary; Editing by Marguerita Choy)