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The discount of Western Canada Select (WCS) heavy crude to the North American benchmark West Texas Intermediate futures (WTI) continued to narrow on Friday, dipping into sub-$9 territory as global oil prices fell to pandemic levels.
WCS for May delivery in Hardisty, Alberta, settled at $8.90 a barrel under WTI, according to brokerage CalRock, after having settled at $9.10 under the U.S. benchmark on Thursday.
The differential, which was sitting at higher than $13 a barrel a month ago, has been narrowing since the first week in March. It tightened by 90 cents this week alone, as oil markets were shaken by U.S. President Trump’s tariff policy announcements.
* The market has erased what had been a months-long drag on the relative price of Canadian heavy oil over concerns that U.S. President Donald Trump could tariff energy products from its northern neighbour. Trump said Wednesday USMCA-compliant goods from Canada, including oil, would remain tariff exempt. * The remarkably tight WCS discount also reflects tighter U.S. sanctions on heavy crude-producing countries such as Venezuela, as well as lower heavy crude exports from Mexico.
* But the differential on Canadian heavy crude also tends to widen when global oil prices are higher overall and narrow in lower price environments, in part because lower prices mean less competition for pipeline space for Canadian producers. * Global oil prices plunged nearly 8% on Friday to the lowest level since 2021, as China retaliated against U.S. President Donald Trump’s aggressive tariffs.
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