The discount on Western Canada Select to North American benchmark West Texas Intermediate futures narrowed slightly on Friday.
WCS for October delivery in Hardisty, Alberta, settled at $11.50 a barrel under the U.S. benchmark WTI, according to brokerage CalRock, compared with $11.55 a barrel discount on Thursday.
* WCS discounts have been narrower so far in September than in August, due in part to the restart of BP’s 440,000-barrel-per-day refinery in Whiting, Indiana, which had been affected by flooding after a severe thunderstorm. The refinery is often the single largest purchaser of Canadian crude.
* Canadian crude is also seeing strong buying demand from Asia, said Wood Mackenzie analyst Dylan White.
* Still, WCS discounts are not expected to be as narrow in the second half of the year as they were this spring. Western Canadian crude production continues to grow, with the oil-producing province of Alberta hitting a new record of 4.3 million barrels per day in July. Increased output will drive increased utilization of the country’s export pipelines, analysts say.
* Another factor supporting increased widening is the threat of competition from Venezuelan heavy crude exports to the U.S. Gulf Coast, which resumed last month due to easing of U.S. sanctions.
* Oil prices fell on Friday as a weak U.S. jobs report dimmed the outlook for energy demand, while swelling supplies may grow further after OPEC and allied producers meet over the weekend.
(Reporting by Amanda Stephenson in Calgary; Editing by Mohammed Safi Shamsi)