The discount on Western Canada Select to North American benchmark West Texas Intermediate futures widened on Tuesday.
WCS for January delivery in Hardisty, Alberta, settled at $12.95 a barrel below the U.S. benchmark WTI, according to brokerage CalRock, compared to $12.75 on Monday.
* The WCS discount is at its widest point since March.
* The recent weakening has been driven by widening differentials for global heavy crudes, which is not abnormal during shoulder season, said Rory Johnston, founder of the Commodity Context newsletter.
* But the WCS discount remains broadly supported, as it has been all year, by sufficient export pipeline capacity out of Canada. While Enbridge’s Mainline is apportioned — an industry term for when demand for pipeline space exceeds capacity — the Trans Mountain pipeline, Canada’s only oil export pipeline with direct access to overseas markets, is not.
* Historically, constraints in oil export capacity have had a negative impact on Canadian oil prices relative to major global benchmarks.
* Oil prices declined 1% on Tuesday as markets weighed faltering Russia-Ukraine peace hopes against fears of oversupply.
(Reporting by Amanda Stephenson in Calgary; Editing by Maju Samuel)