Discount on Western Canada Select Narrows

* The WCS discount is now almost $3 wider than it was in late spring, when wildfires temporarily disrupted oil sands supply in northern Alberta and the Canadian crude market saw some of the tightest WCS differentials since 2020.

* One factor behind the recent widening trend is the threat of competition from Venezuelan heavy crude exports to the U.S. Gulf Coast, which resumed last month due to easing of U.S. sanctions.

* But prices for Canadian crude should remain generally supported this fall due to the opening of the Trans Mountain pipeline expansion in 2024, analysts say. The pipeline, which moves oil from Alberta to British Columbia’s Pacific coast, increased global export options for Canadian oil shippers and is expected to have spare capacity until 2027-28.

* Globally, oil prices settled up more than 1% a barrel on Tuesday after the U.S. imposed sanctions targeting Iran’s oil revenue stream, and ahead of an OPEC+ meeting on Sunday where analysts expect the group will not unwind remaining voluntary cuts.

* Tuesday 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 Nia Williams)