Canadian Heavy Oil Discount Narrows to Smallest Since November

Canadian heavy crude strengthened to the highest level versus U.S. benchmark West Texas Intermediate since November.

Western Canada Select strengthened by 60 cents to $28.50 a barrel below WTI at 2:10 p.m. New York time, according to data compiled by Bloomberg. Syncrude, a synthetic light oil produced from oil-sands bitumen, gained 75 cents to trade at a $1 a barrel premium.

The gains put the discount for WCS at the narrow end of a $30- to $40-a-barrel range in the past two months, where it should stay in the near future, said Katherine Spector, New York-based commodities strategist at CIBC World Markets.

Oil demand from refiners may decline as plants shut for seasonal maintenance. The spread was $42.50 a barrel on Dec. 14.

“We have quite a heavy maintenance schedule through at least May or June for the key refineries taking Canadian crude,” Spector said. “There’s limited upside in the short term based on the refinery schedule we know now.”

TransCanada Corp. Chief Executive Officer Russ Girling said approval for the section of the Keystone XL oil pipeline crossing the U.S.-Canada border could come within “a few weeks to a couple of months.”

If approved, the cross-border pipeline will deliver 830,000 barrels a day from Canadian oil sands and North Dakota shale fields to U.S. Gulf Coast refineries, narrowing the gap between WCS other WTI.

Gulf Coast

West Texas Sour’s discount to WTI widened $1 to $6.25 a barrel. WTI in Midland strengthened 10 cents to a $1.90 discount to the same crude in Cushing.

Light Louisiana Sweet’s premium narrowed 5 cents to $20.20 a barrel, and Heavy Louisiana Sweet slipped the same amount to $20.30 a barrel over WTI.

Poseidon oil’s premium to WTI shrank 30 cents to $14.55. Mars Blend slipped 35 cents to $14.30 a barrel over WTI and Southern Green Canyon’s premium narrowed 5 cents to $14.40.

The premium for Thunder Horse, a sour crude with lower sulfur content than Mars, Poseidon and Southern Green Canyon, narrowed 35 cents to $17.65 above WTI.

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