Heavy Canadian crude’s discount to U.S. benchmark futures narrowed to the smallest since April as crude-by-rail shipments were forecast to increase.
Western Canadian Select, an oilsands benchmark, strengthened to a US$9.10 discount on Wednesday, data compiled by Bloomberg show. The gap has narrowed US$4.15 this month, with US$1.30 shed on Tuesday. Prices are closing in on West Texas Intermediate futures after Canadian Pacific Railway Ltd. said crude-by-rail volumes were expected to rise 20 per cent in the third quarter from about 160,000 barrels a day in the second quarter.
With pipelines full, crude shipped by rail has become the only real alternative left for producers to send excess oil out of the province. The region’s largest producers have been under mandatory production limits since January after rising production drove WCS prices as low as US$50-a-barrel below WTI.
The heads of Canadian oil companies including Cenovus Energy Inc. and Suncor Energy Inc. are offering to boost crude-by-rail shipments in exchange for higher production limits.
Bloomberg.com
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