The discount on Western Canada Select crude oil to North American benchmark West Texas Intermediate futures widened on Wednesday.
WCS for July delivery in Hardisty, Alberta, settled at $12.40 a barrel below the U.S. benchmark WTI, according to brokerage CalRock, compared with $12.25 a barrel on Tuesday.
* Since the start of the U.S. war on Iran, the WCS differential has been driven by the WTI market’s extreme backwardation, a term for when immediate deliveries trade at a premium over barrels scheduled for delivery in later months.
* Since a barrel of Canadian heavy crude takes a long time to travel out of the Western Canada Sedimentary Basin, barrels at Hardisty have needed to be partially discounted to account for that travel time, said Rory Johnston, founder of the Commodity Context newsletter.
* WTI timespreads have eased over the past month, allowing the WCS differential to start narrowing again, Johnston said.
* Oil prices rose around 2% on Wednesday, extending the previous session’s gains, as hostilities in the Middle East erupted anew and talks between Tehran and Washington showed little progress.
(Reporting by Amanda Stephenson in Calgary; Editing by Shreya Biswas)