Heavy Oil Discount Narrows After TMX Variance Granted

* Heavy crude prices strengthened after the Canada Energy Regulator approved a variance request from the Trans Mountain pipeline expansion project (TMX) late on Friday. The approval clears the way for the completion of the long-delayed 590,000 barrel-per-day expansion.

* Based on timelines presented as part of Friday’s regulatory hearing, TMX could potentially file a leave to open application in March 2024, RBC Capital Markets analyst Greg Party said in a research note.

* Canadian oil firms have been ramping up production in anticipation of increased export capacity, and Friday’s decision helps alleviate concerns among traders that delays to TMX could cause pipeline bottlenecks that would drive down WCS prices.

* Global oil prices weakened slightly as the Middle East conflict’s limited impact on crude output prompted profit-taking after oil benchmarks gained 2% last week.

(Reporting by Nia Williams in British Columbia; Editing by Sherry Jacob-Phillips)