Discount on Western Canada Select Narrows

* The differential between Canadian heavy crude and the U.S. benchmark has trended wider this month than earlier in the summer. The completion of maintenance projects at Canadian oil sands sites has boosted heavy crude supply at the same time that fall turnarounds at U.S. Gulf Coast refineries are reducing demand.

* The WCS discount could see additional gradual widening by the end of this year, said RBN Energy analyst Martin King. Canadian oil sands production is expected to rise further by the end of 2025, and could face competition from Venezuelan heavy crude exports to the U.S. Gulf Coast, which are set to resume this month due to an easing of U.S. sanctions.

* But the WCS discount remains historically tight. That’s largely due to the opening last year of the Trans Mountain Pipeline expansion, which has opened up new export capacity for Canadian oil. Even with a rise in Canadian crude oil output, the expansion in pipeline capacity has put downward pressure on crude inventories in the oil-producing province of Alberta, said RBN Energy analyst Martin King.

* Global oil prices fell more than 1% on Wednesday after U.S. crude supply unexpectedly rose, but losses were limited by the U.S. Treasury Secretary saying President Donald Trump could leverage sanctions at a meeting with Russian President Vladimir Putin.