Canada crude - Heavy oil prices continue to strengthen

Tue Feb 12, 2013 5:55pm EST

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* WCS for March quoted at $22.75/bbl under WTI

* Narrowest differential since late October

* March synthetic quoted at $2.80/bbl over WTI

CALGARY, Alberta, Feb 12 (Reuters) - Canadian heavy crude differentials narrowed to the lowest in four months on Tuesday even though Saskatchewan's only oil refinery closed its coker unit a day earlier while it investigates the cause of a fire.

Western Canada Select heavy grade for March delivery last traded at a $22.75 per barrel discount to the West Texas Intermediate benchmark, according to Shorcan Energy Brokers.

It was the tightest differential to the benchmark since late October and compares with a settlement price on Monday of $24.75 per barrel under WTI.

Prices for the heavy crude have improved for seven of the last eight trading sessions. With improved pipeline access to the U.S. Midwest market and few big refineries conducting maintenance, Western Canada Select has rebounded for discounts of more than $40 per barrel in mid-January.

The improving prices comes despite the shutdown of the coker unit, which processes heavy crude, at the 145,000 barrel per day Co-op Refining Complex in Regina, Saskatchewan, following a fire in the unit's pump house early on Monday.

Officials could not say when the unit will re-open as they investigated the cause of the blaze.

Prices for light synthetic crude also improved on speculation that the Syncrude Canada Ltd oil sands project would lower its production target for February.

Canadian Oil Sands Ltd, Syncrude's largest shareholder, could not be immediately reached for comment.

Synthetic crude for March delivery last traded for a $2.80 per barrel premium to West Texas Intermediate, up from a Monday settlement price of $1.50 per barrel over the benchmark.

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