The discount on Western Canada Select (WCS) heavy crude versus the North American benchmark West Texas Intermediate (WTI) widened on Friday:

WCS for December delivery in Hardisty, Alberta, settled at $26 a barrel under WTI, according to CalRock, strengthening from $25.85 a barrel under WTI on Thursday.

Strong heavy oil production after heavy turnarounds in the summer, weak mid-west refining activity and concerns the 590,000 barrel-per-day Trans Mountain pipeline may be delayed beyond the first quarter of next year have all led to wide differentials for Canadian crude in recent months.

“The greater discounts for Canadian heavy oil production may persist into the end of this year and the early months of 2024 based on production plans that have been announced by oil sands producers,” said Martin King, and analyst with RBN Energy.

As Midwest refiners increase runs, demand for heavy oil should rise by at least 300,000 to 400,000 barrels per day, likely helping offset some of the supply pressures facing the market and narrow the discount, King added.

Benchmark oil prices gained about 2% on Friday as Iraq voiced support for OPEC+’s oil cuts ahead of a meeting in two weeks and as some speculators covered massive short positions ahead of weekend uncertainty.

The outright price of WCS was just over $51 a barrel.
Source: Reuters (Reporting by Arathy Somasekhar in Houston; Editing by Krishna Chandra Eluri)