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.