(BOE Report)– The discount on Western Canada Select to North American benchmark West Texas Intermediate futures widened on Thursday.
WCS for October delivery in Hardisty, Alberta, settled at $11.55 a barrel under the U.S. benchmark WTI, according to brokerage CalRock, compared with $11.45 a barrel discount on Wednesday.
* WCS discounts had already widened in August, in part due to BP’s 440,000-barrel-per-day refinery in Whiting, Indiana, being affected by flooding after a severe thunderstorm. The refinery is often the single largest purchaser of Canadian crude.
* Another factor behind the summer’s 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.
* WCS discounts narrowed slightly at the start of September amid the restart of BP’s Whiting unit and strong buying in Asia, said Wood Mackenzie analyst Dylan White.
* But WCS discounts will likely remain wider in the second half of the year than they were in the second quarter, as strong Western Canadian production should drive high utilization along existing pipeline routes, White said.
* Global oil prices eased about 1% to a two-week low on Thursday on a surprise build in U.S. crude inventories last week and expectations that OPEC+ producers will increase output targets at a meeting this weekend.
(Reporting by Amanda Stephenson in Calgary; Editing by Nia Williams)
