Heavy crude oil discount widened following Keystone pipeline closure

A significant widening of Western Canada Select (WCS) crude oil's discount to the benchmark West Texas Intermediate (WTI) was observed yesterday due to a leak from the Keystone pipeline and its subsequent closure.

As it was stated by TC Energy, the mentioned pipeline with a capacity of 622,000 barrels per day, owned by the company, was shut on Wednesday evening due to a spill happened in Kansas. Thus, the supply of Canadian oil to American fuel refineries is temporarily halted, and there’s no information yet on when the pipeline will be operational again.

As it was reported by a Calgary-based broker, WCS heavy crude oil for this month delivery is now traded with a $33.50-per-barrel discount to WTI. The discount widened from the previous amount of $27.50 per barrel to the benchmark.

However, brokers suppose that the pipeline won’t remain shut for a long period of time.