Canada Select Discount Hits Narrowest Mark Since November
The discount on Western Canada Select crude oil to North American benchmark West Texas Intermediate futures tightened again on Thursday, reaching its narrowest point since November. WCS for July delivery in Hardisty, Alberta settled at $11.65 a barrel below the U.S. benchmark WTI.
This represents a narrowing of approximately $4 since mid-May. The tightening of the discount is attributed to wet weather and a power outage that affected oil sands producer Cenovus Energy last week, resulting in crude export supply tightness out of Western Canada.
Canada's Trans Mountain pipeline is currently at capacity for June, with the pipeline at apportionment for the first time since its completion two years ago. This could lead to bottleneck conditions on Canadian export pipelines, potentially widening the discount in the coming months due to forecasted supply gains from the Western Canada Sedimentary Basin.
According to Wood Mackenzie analyst Lee Williams, 'Looking forward, significant risk for ongoing volatility and discounting remains as long as global disruptions persist.'