Canada crude-WCS extends rally, hits 15-week high

Thu Feb 7, 2013 3:15pm EST
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* March WCS quoted at $25.75/bbl under WTI
    * Narrowest WCS spread since Oct 23
    * March synthetic $0.75/bbl over WTI

    CALGARY, Alberta, Feb 7 (Reuters) - Canadian heavy crude
prices rose again on Thursday, hitting a 15-week high in a rally
fueled by reduced pipeline rationing and talk of some players
getting caught short.
    Western Canada Select heavy blend for March delivery last
sold for $25.75 a barrel under benchmark West Texas
Intermediate, narrowing its discount from a Wednesday settlement
of $26 a barrel under, according to Shorcan Energy Brokers. That
was its slimmest differential since Oct 23.
    Traders have expressed surprise at this month's steady gains
after two months of discounts that at times topped $40 a barrel.
Surging production, tight pipeline capacity and a series of
refinery outages were blamed for the slump, and those
fundamentals are largely unchanged.
    However, apportionment levels on Enbridge Inc's 
pipeline network to the U.S. Midwest are below those set for
last month, easing some of the price pressure, traders have
    In addition, the start-up of Imperial's 110,000 barrel a day
Kearl project in northern Alberta, first expected to begin
commercial production at the end of 2012, is now targeted for
the end of the first quarter. Full production is scheduled for
the "next several months". 
    Light synthetic crude prices also strengthened. It was last
quoted at 75 cents above WTI, compared with 60 cents above on
    This week, Suncor Energy Inc and Syncrude Canada
reported lower oil sands-derived crude production for January.