Differential for Western Canadian Select at Hardisty strengthens to 15-month high

The differential for Western Canadian Select at Hardisty, Alberta rose to its highest level in more than 15 months, with traders attributing this rise to an escalation in tensions in the Middle East.

Platts, part of S&P Global Commodity Insights, assessed Western Canadian Select at Hardisty at a $10.90/b discount to the WTI CMA on Oct. 10 the strongest since it was assessed at a $10.70/b discount to the WTI CMA back on July 7, 2023.

Market sources credit this rally to the increased sensitiveness of Canadian crude barrels to geopolitical issues since TMX came online.

“Everything's just up on war fears. I think Canada is a function of the global markets now. It used to be pipeline constraints, now it can float on world pricing,” the source noted.

The 590,000 b/d expansion to the Trans Mountain pipeline began operations on May 1, allowing additional Canadian crude to be exported from the Pacific Coast to overseas refineries. This increased offtake capacity has allowed Canadian crude differentials to move more with global prices and increased its price sensitiveness to geopolitical events.

The differential for WCS Hardisty was assessed at $13.15/b discount to the WTI CMA back on Sept. 27, the last assessment before Iran’s missile attack against Israel. Prices have steadily risen since as markets prepare for a possible Israeli response.