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Reuters
The discount on Western Canada Select crude oil to North American benchmark West Texas Intermediate futures narrowed by almost $1 a barrel on Monday, as the Iran war disrupted Middle Eastern output.
WCS for April delivery in Hardisty, Alberta, settled at $12.70 a barrel below the U.S. benchmark WTI, according to brokerage CalRock, compared to $13.65 on Friday.
* Global oil and gas prices surged on Monday following Israeli and U.S. strikes on Iran and retaliation by Tehran that forced shutdowns of oil and gas facilities across the region and disrupted shipping in the crucial Strait of Hormuz.
* Much of the oil that comes out of the Strait is graded medium to sour, so supply concerns will help to tighten global sour spreads and the WCS differential, said Rory Johnston, founder of the Commodity Context newsletter.
* Monday’s dramatic tightening reverses the widening that took place in January and February due to concerns that an increase in Venezuelan barrels would compete with similar-in-quality Canadian heavy oil in the U.S. Gulf Coast over the longer term.
* The WCS discount is now back to where it was at the end of December, before the U.S. capture of Venezuelan President Nicolas Maduro.29dk2902l
* 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 the trading activity takes place.
(Reporting by Amanda Stephenson in Calgary; Editing by Alan Barona)
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