The discount on Western Canada Select crude oil to North American benchmark West Texas Intermediate futures narrowed on Wednesday, retreating from the troughs reached earlier in the week but remaining at a historically wide spread.
WCS for December delivery in Hardisty, Alberta, settled at $28.75 a barrel below the US benchmark WTI, compared with $31.60 on Tuesday, according to brokerage CalRock. The discount remains double what it was in September and at its widest since 2022. Earlier in the week, it touched levels not seen since 2018.
* Steep discounts on Canadian heavy crude have historically been a result of a lack of pipeline capacity out of the Western Canadian Sedimentary Basin.
* This time, the widening is being driven in part by surging freight rates globally caused by ongoing disruptions in the Middle East, as well as refinery maintenance in the US.
* Canada’s Cenovus Energy, one of the country’s largest oil sands producers, said on Wednesday it is more attractive right now to export barrels off the B.C. west coast than it is to send them to the US Gulf Coast, where the freight situation has resulted in a glut of heavy crude. But CEO Jon McKenzie said he expects this fall’s unexpectedly wide WCS differential to be a temporary situation, adding the company will not change its production plans in response.
* Oil prices fell more than 8% to settle at their lowest in more than two months on Wednesday after President Donald Trump’s Republican Party lost control of Congress in midterm elections, as investors bet that the shift in power could hasten the end of the US-Israeli war with Iran.
(Reporting by Amanda Stephenson in Calgary; Editing by Perla Velasco)