Western Canada Select crude discount hits 2023 levels on high freight costs
The discount on Western Canada Select crude to West Texas Intermediate futures reached its widest levels since 2023 this month, driven by soaring global freight prices that make re-exporting Canadian barrels from the US Gulf Coast cost-prohibitive. The WCS differential at Houston is the steepest since January 2023.
Oct 5 (Reuters) — The discount on Western Canada Select crude oil to North American benchmark West Texas Intermediate futures has blown out this month, reaching levels not seen since 2023 as soaring global freight prices put pressure on Canadian barrels being re-exported off the US Gulf Coast. 65 on Friday, and is more than $10 wider than it was at this point in last month's trading cycle. The last time the WCS-Hardisty discount was this wide was November 2023, said Rory Johnston, founder of the Commodity Context newsletter. The widening is being driven by the WCS differential at Houston, which is the steepest since January 2023, he said.
The cost to transport oil on tankers globally has hit record highs in recent weeks following attacks on ships since the US-Iran war began in late February. That has made re-exporting Canadian heavy crude barrels from the US Gulf Coast cost-prohibitive, traders said, adding Canada's main crude export pipelines are essentially full, leaving few options to absorb strong production coming out of the country's oil sands region. Rising volumes of Venezuelan crude being imported into the US Gulf Coast are also putting pressure on Canadian barrels.
Global oil prices lost about $2 on Monday after crude exports from the Middle East increased and the Group of Seven nations pledged to boost supplies, though selling was limited by ongoing disruption fears linked to the US war with Iran. com)