Heavy discount narrows as reduced production offsets lower demand

Canadian heavy crude’s discount narrowed versus West Texas Intermediate (WTI) on Friday as curtailed production levels eased price pressures from reduced oil demand.Western Canada Select (WCS) heavy blend crude for August delivery in Hardisty, Alberta, traded at $7.95 per barrel below WTI, according to NE2 Canada Inc, narrower than Thursday’s settle of $8.50 under.

The market is balanced, with curtailed production offsetting reduced refinery demand, a Calgary industry source said. Also seen factoring into support for Canadian prices are heavy oil reductions from OPEC countries.

Canadian refining runs rebounded by 100,000 barrels per day for the week ended June 30, over the previous week, moving the utilization rate to 71%, Tudor Pickering Holt & Co said.

Global oil prices climbed more than 2% after the International Energy Agency (IEA) bumped up its 2020 demand forecast but record-breaking new coronavirus cases in the United States tempered expectations for a fast recovery in fuel consumption.