Heavy discount narrows as pipeline leak cuts off supplies

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Reuters

Canadian heavy crude’s discount versus West Texas Intermediate (WTI) narrowed on Wednesday, after a pipeline leak in Alberta disrupted oil shipments.Imperial Oil Ltd said it had shut all production at its 220,000-barrel-per-day (bpd) Kearl oil sands site in Canada due to an outage of part of the Polaris diluent pipeline following the spill.

Western Canada Select (WCS) heavy blend crude for October delivery in Hardisty, Alberta, traded at $9.40 per barrel below WTI, according to NE2 Canada Inc. It settled the previous day at $9.90 under.

The pipeline outage crimped supplies as Canadian oil sands companies were steadily restoring production that had been shut in after the coronavirus pandemic spread and curbed demand from refineries.

Light synthetic oil from the oil sands for October delivery traded at $2.75 below WTI, unchanged from the previous day’s settle.

Global oil prices fell more than 1.5%, reversing course as gasoline demand fell in the United States in the latest week, an indication that economic recovery from the pandemic may be slower than expected.