The discount on Western Canada Select to North American benchmark West Texas Intermediate futures narrowed on Monday.
WCS for October delivery in Hardisty, Alberta, settled at $11.40 a barrel under the U.S. benchmark WTI, according to brokerage CalRock, compared with $11.50 a barrel discount on Friday.
* Monday’s close was the narrowest discount for WCS since late July. Discounts widened in August due in part to the shutdown 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.
* 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 settled higher on Monday, recovering some of last week’s losses, after producer group OPEC+ opted for a modest output hike and investors priced in the possibility of more sanctions on Russian crude.
(Reporting by Amanda Stephenson in Calgary; Editing by Alan Barona)