Heavy discount stays tight despite easing oil curtailments

The differential on Canadian heavy crude remained at tight levels compared to the North American benchmark on Tuesday, despite easing production limits in Alberta.

* Western Canada Select (WCS) heavy blend crude for September delivery in Hardisty, Alberta, traded at $13 per barrel below West Texas Intermediate (WTI) oil, according to Net Energy Exchange, unchanged from Friday’s settlement.

* Canadian crude markets were closed on Monday for a Canadian holiday.

* The continued tight WCS-WTI differential has been a surprise, since Alberta has steadily reduced its curtailment orders for the Canadian province’s oil, boosting supplies, a Calgary industry source said, adding that growing rail movement and improved pipeline flows are likely the reasons behind the tight differential.
 

* The Alberta provincial government ordered curtailments in January but has gradually reduced them since, including for September.
 

* The differential looks to widen soon, however, to incentivize rail shipments, the source said. Imperial Oil Ltd said on Friday it would reduce its rail shipments in August and September because of unfavorable economics.

* Light synthetic crude from the oil sands for September delivery traded at $2.25 a barrel over WTI, with the premium shrinking from Friday’s settle of $2.50 per barrel over the benchmark.

* Oil prices fell slightly on Tuesday, with Brent crude remaining near seven-month lows just below $60 a barrel because of increasing trade tensions between China and the United States.

* Enbridge Inc said on Friday it would invite bids for contracted space on its Mainline system, as shippers compete to move oil on the country’s congested pipeline networks.