The discount on Western Canada Select crude oil to North American benchmark West Texas Intermediate futures narrowed on Wednesday.
WCS for February delivery in Hardisty, Alberta, settled at $14.30 a barrel below the U.S. benchmark WTI, according to brokerage CalRock, compared with $14.40 a barrel on Tuesday.
The discount on Canadian heavy crude remains more than $1 wider than it was last month.
The price for Canadian heavy crude grades has fallen in the wake of heightened market volatility caused by U.S. President Donald Trump’s stated goal to increase Venezuelan oil production.
The market is watching for the potential for an increase in Venezuelan barrels to compete with similar-in-quality Canadian heavy oil in the U.S. Gulf Coast over the longer term.
But some analysts have suggested the market thus far may have overreacted, given it will take years for Venezuela to significantly ramp up its oil production beyond current levels.
Global oil prices settled higher on Wednesday, then gave back most of the day’s gains after U.S. President Donald Trump eased fears of disruptions to Iranian supplies when he said late in the afternoon that killings in Iran’s crackdown on civil unrest were subsiding.
(Reporting by Amanda Stephenson in Calgary; Editing by Sahal Muhammed)