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By EnergyNow Staff
Western Canada Select (WCS) and West Texas Intermediate (WTI) are both crude oil benchmarks, but they differ in quality, location, and market dynamics — which is why WCS typically trades at a discount to WTI.
1. What They Are
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WTI (West Texas Intermediate)
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A light, sweet crude oil (low density, low sulfur).
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Primarily produced in the U.S. (Texas, North Dakota).
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Benchmark for U.S. oil pricing and traded in Cushing, Oklahoma.
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WCS (Western Canada Select)
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A heavy, sour crude oil (high density, higher sulfur content).
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Produced in Alberta’s oil sands.
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Benchmark for Canadian heavy crude pricing.
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Blend of bitumen, conventional heavy oil, and diluent to make it transportable.
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2. Key Differences
| Feature | WTI | WCS |
|---|---|---|
| API Gravity | ~39–40 (light) | ~20–22 (heavy) |
| Sulfur Content | ~0.24% (sweet) | ~3.5% (sour) |
| Location | U.S. Midcontinent | Western Canada |
| Market Role | U.S. Benchmark | Canadian Heavy Crude Benchmark |
3. Why WCS Trades at a Discount to WTI
This difference is called the “WCS-WTI differential” and usually ranges between $10–$20 per barrel, though it can spike higher. Main reasons:
A. Quality Discount
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Heavy, sour crude like WCS requires more complex refining (coking units, desulfurization) to produce gasoline, diesel, and jet fuel.
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Refiners incur higher processing costs and get fewer high-value products per barrel.
B. Transportation Constraints
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WCS is landlocked in Alberta.
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Must be shipped via pipeline or rail to U.S. refineries (mainly in the Midwest and Gulf Coast).
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Pipeline capacity limits cause bottlenecks, increasing shipping costs and widening the discount.
C. Market Access
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Fewer refineries are configured to process heavy crude.
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WCS depends heavily on U.S. buyers, making it vulnerable to changes in U.S. demand.
D. Seasonal & Policy Factors
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Maintenance season at refineries can temporarily reduce demand.
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Regulatory changes (e.g., pipeline delays like Keystone XL’s cancellation) can affect supply routes.
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Global heavy crude competition (e.g., Venezuela, Mexico) can pressure prices.
4. When the Discount Narrows or Widens
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Narrows when: pipeline capacity increases, demand for heavy crude rises, or heavy crude supply elsewhere falls.
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Widens when: pipeline congestion worsens, oil sands output surges, U.S. refinery outages occur, or global demand for heavy crude drops.
In short:
WCS is heavier, sourer, and harder to move than WTI, so it’s worth less on the market. That “WCS discount” reflects both the quality gap and the logistical hurdles of getting Canadian oil to refiners.
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