The discount on Western Canada Select to North American benchmark West Texas Intermediate futures narrowed on Wednesday.
WCS for October delivery in Hardisty, Alberta, settled at $11.45 a barrel under the U.S. benchmark WTI, according to brokerage CalRock, compared with $11.70 a barrel discount on Tuesday.
* Prior to this week’s tightening, the WCS discount had widened to as much as $12.80 a barrel in late August. The sharp widening was due in part to BP’s 440,000-barrel-per-day refinery in Whiting, Indiana, being affected by flooding after a severe thunderstorm. The refinery, which wasn’t fully back to full operations until a week later, is often the single-largest purchaser of Canadian crude, said Rory Johnston, founder of the Commodity Context newsletter.
* Another factor behind the recent widening trend 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.
* Western Canadian oil production continues to grow, but WCS prices should remain generally supported this fall due to the opening of the Trans Mountain pipeline expansion in 2024, analysts say. The pipeline, which moves oil from Alberta to British Columbia’s Pacific coast, increased global export options for Canadian oil shippers and is expected to have spare capacity until 2027-28.
* Global oil prices settled down more than 2% on Wednesday ahead of a weekend meeting of OPEC+ producers that is expected to consider another increase in production targets in October.
(Reporting by Amanda Stephenson in Calgary; Editing by Lisa Shumaker)