(BOE Report)– The discount on Western Canada Select to the North American benchmark West Texas Intermediate futures widened on Monday.
WCS for September delivery in Hardisty, Alberta, settled at $12.25 a barrel under the U.S. benchmark WTI, according to brokerage CalRock, compared with $12.10 a barrel on Friday.
* The differential between Canadian heavy crude and the U.S. benchmark has trended wider recently, a typical seasonal pattern as the end of the summer driving and road construction season reduces demand for Canadian heavy oil.
* The completion of maintenance projects at Canadian oil sands sites has also boosted heavy crude supply at the same time that fall turnarounds at U.S. Gulf Coast refineries are reducing demand, said Enverus analyst Michael Berger. Rising OPEC+ supplies are also creating more competition for Canadian barrels on the global market.
* But prices for Canadian crude should remain generally supported 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.
* “I think you could see (WCS) come off a little bit more, but we expect it to remain stronger than it has in previous years,” said Berger.
* Globally, oil settled flat on Monday after falling more than 4% last week, as investors looked towards talks this week between the U.S. and Russia over the war in Ukraine.
(Reporting by Amanda Stephenson in Calgary; Editing by Alan Barona)
