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The discount on Western Canada Select (WCS) to the North American benchmark West Texas Intermediate futures (WTI) widened on Monday but remained in historically tight territory as wildfires affected Canadian oil production.
WCS for July delivery in Hardisty, Alberta, settled at $8.80 a barrel under the U.S. benchmark WTI, according to brokerage CalRock, after having settled at $8.50 under the U.S. benchmark on Friday.
Wildfires burning in Canada had disrupted more than 344,000 barrels of oil sands output as of Monday, according to Reuters calculations, or about 7% of Canada’s oil output.
Canadian oil producer Cenovus Energy CVE.TO declared force majeure on its supply of Christina Lake Dil-bit heavy crude due to wildfires in the oil-producing province of Alberta, two trading sources said.
* Canadian heavy crude has been trading at a “crazy tight” discount recently, said Rory Johnston, energy analyst and founder of the Commodity Context newsletter. This is in part due to the opening of the Trans Mountain pipeline expansion one year ago, which boosted the country’s oil export capacity.
* Globally, oil prices climbed nearly 3% on Monday, despite producer group OPEC+ sticking with output hike plans, as President Donald Trump’s new tariff threats weighed on the U.S. dollar.
* Monday was the start of the Canadian crude market’s trade cycle, which runs from the first of each month until the day before pipeline nominations are due, and in which the bulk of trading activity takes place.
(Reporting by Amanda Stephenson in Calgary; Editing by Alan Barona)
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