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CALGARY, Alberta (Reuters) - Canadian heavy crude differentials tightened to their narrowest in almost two years on Monday, the first day of the new monthly trade cycle, while synthetic prices held strong on the ongoing outage at the Syncrude oil sands project in northern Alberta.
Western Canada Select heavy blend crude for May delivery last traded at $10.55 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers.
That was the tightest discount on benchmark Canadian heavy barrels since June 2015, and 70 cents narrower than Friday's settle of $11.25 per barrel below WTI.
The jump in WCS was driven by a number of factors, according to market players in Calgary.
Two traders said a cut in production at Syncrude meant some producers were unable to get hold of the light synthetic crude they mix with bitumen so it can flow through pipelines, which has reduced output of the heavy blend known as synbit.
Meanwhile, Suncor Energy's (SU.TO) 180,000-barrel-per-day Firebag oil sands plant is undergoing maintenance in the second quarter, a factor likely to further tighten supply.
Some market players said cuts to sour crude volumes by global producer group OPEC could also be helping support Canadian heavy oil demand and prices.
Syncrude has cut its production for all of April to zero, three market sources said, after a fire in March damaged part of the 350,000-barrel-per-day facility and prompted the operator to bring forward scheduled maintenance.
Light synthetic crude from the oil sands has been trading at a hefty premium ever since, with May barrels last changing hands at $4.90 per barrel over WTI.
On Friday May synthetic settled at $4.75 per barrel over the benchmark, while April volumes were $6.00 a barrel above WTI.
Reporting by Nia Williams; Editing by Meredith Mazzilli