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CANADA-CRUDE-Discount on Western Canada Select heavy crude widens; wildfires affect production

On Monday, the discount between West Texas Intermediate (WTI), North America's benchmark futures contract, and Western Canada Select (WCS), widened but remained within historically tight ranges as wildfires affected Canadian crude oil production.

WCS for Hardisty, Alberta delivery in July settled at $8.80 per barrel below the U.S. benchmark WTI according to brokerage CalRock. It had settled at $8.50 below the U.S. standard on Friday.

According to calculations, wildfires in Canada have disrupted the production of more than 344,000 oil sands barrels as of Monday. This is about 7% of Canada’s oil output.

Two trading sources reported that Cenovus Energy, a Canadian oil company CVE.TO, declared force majeure in its supply of Christina Lake dil-bit heavy oil due to wildfires burning in Alberta.

Rory Johnston is an energy analyst and the founder of Commodity Context, a newsletter that provides market information. He said Canadian heavy crude was trading at "crazy tight discounts" in recent months. The opening of the Trans Mountain Pipeline expansion one year earlier, which increased the country's capacity to export oil, is partly responsible for this.

* Oil prices rose nearly 3% globally on Monday, despite the fact that OPEC+ continued to increase production, despite President Donald Trump's latest tariff threats weighing on the U.S. Dollar.

The bulk of trading in the Canadian crude oil market takes place from the 1st of every month to the day before pipeline nominations due.

(source: Reuters)