Discount on Western Canada Select Tightens to Narrowest Since November

The discount on Western Canada Select crude oil to North American benchmark West Texas Intermediate futures tightened again on Thursday to its narrowest point since November.WCS for July delivery in Hardisty, Alberta, settled at $11.65 a barrel below the U.S. benchmark WTI, according to brokerage CalRock, compared to $11.90 a barrel on Wednesday.

* The WCS differential has narrowed by approximately $4 since mid-May.

* Wet weather and a power outage that affected oil sands producer Cenovus Energy last week have contributed to crude export supply tightness out of Western Canada.

* Canada’s Trans Mountain pipeline is at capacity for June. The pipeline is at apportionment, an industry term for when demand for spot capacity on a pipeline exceeds availability, for the first time since the Trans Mountain pipeline was completed two years ago.

* The prospect of bottleneck conditions on Canadian export pipelines could widen the discount in the coming months amid forecasted supply gains out of the Western Canada Sedimentary Basin, said Wood Mackenzie analyst Lee Williams.

* “Looking forward, significant risk for ongoing volatility and discounting remains as long as global disruptions persist,” Williams said.

* Global oil prices settled lower on Thursday after U.S. President Donald Trump canceled plans to strike Iran within hours, a move that raised expectations for a deal to end more than three months of war.

(Reporting by Amanda Stephenson in Calgary Editing by Matthew Lewis)