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Crude discount narrows as U.S. benchmark nosedives

Don Horne   


Canadian heavy crude’s discount narrowed versus West Texas Intermediate (WTI) on Thursday, as the U.S. benchmark plunged on virus-related demand concerns.

Deep oil curtailments in Western Canada, ahead of a gradual increase in refinery demand, has kept differentials narrower than usual, according to traders.

Scotiabank told Reuters it expects three-quarters of Western Canadian shut-in volumes to return through summer, while turnarounds are also completed. It estimates total shut-ins and turnarounds at 966,000 barrels per day.

Scotiabank expects Canadian price differentials to widen as shut-in volumes return, particularly affecting heavy oil prices.

Western Canada Select (WCS) heavy blend crude for July delivery in Hardisty, Alberta, traded at $8.50 per barrel below WTI, according to NE2 Canada Inc, narrower than Wednesday’s settle of $8.80 under.


Light synthetic crude from the oil sands was trading at $2.50 under, after Wednesday’s settle of $2.75 under.

Global oil prices tumbled 8%, fuelled by renewed concerns about demand destruction as new cases of coronavirus tick up globally, while crude inventories hit a record in the United States.



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