Canadian heavy oil weakened on the spot market after strengthening more than $10 a barrel in the previous six days on a report that was seen as favorable for the development of the Keystone XL pipeline.
Western Canada Select, a heavy blend of diluted oil-sands bitumen, weakened by $1 a barrel to $20.50 a barrel below West Texas Intermediate crude for delivery in April, according to Calgary oil broker Net Energy Inc. In a draft environmental assessment March 1, the U.S. State Department said TransCanada Corp. (TRP)’s planned pipeline, which would carry Canadian crude to the U.S., wouldn’t worsen the risk of global warming.
“I think it was a little bit of an exaggerated price move, and I think what we’re seeing right now is a little bit of pullback on that,” said David Bouckhout, senior commodity strategist at TD Securities in Calgary. He said fundamentals including pipeline constraints and continued work at BP Plc’s (BP) Whiting, Indiana, refinery, also weakened WCS.
Syncrude, a light oil processed from bitumen, strengthened by $1.15 a barrel to a $7.15 premium to WTI, Net Energy said.
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