Canada Faces A New Oil Price ‘’Blowout’’

Prices for heavy crude in Canada have fallen to $36.66 per barrel, once again coming under pressure because of limits on pipeline capacity. Western Canada Select (WCS) typically trades at a discount relative to WTI, due to quality differences and because of the long-distance it needs to travel. But the discount tends to increase – or, put another way, the price of WCS tends to drop – when oil producers run into pipeline bottlenecks. In severe cases, such as late 2018, there is a “blowout” in the price differential between…