Heavy crude Discount Narrows Despite Keystone curtailment

WCS heavy blend crude for December delivery in Hardisty, Alberta, settled at $28.60 barrel under WTI, according to NE2 Inc, narrowing around 25 cents from the previous session.

TC Energy said its 622,000 barrel-per-day Keystone oil pipeline will curtail volumes due to a series of recent severe weather-related impacts to system facilities.

The company said it notified customers on Monday of the force majeure event, and one Calgary-based source said Canadian barrels had sold off on Monday but rallied Tuesday.

A number of other factors are contributing to wide WCS differentials, including weak refinery demand and competition from cheap Russian crude in Asia.

Releases from the U.S. Strategic Petroleum Reserve that flooded the market with sour crude are wrapping up, but many oil producers have said they expect WCS to remain weak well into 2023.

Global oil prices settled higher after news that oil supply to Hungary via the Druzhba oil pipeline has been temporarily suspended due to a fall in pressure.