Heavy crude edges wider, Keystone pipeline volumes curbed

CALGARY, Alberta (Reuters) - Canadian heavy crude differentials widened slightly on Friday, the first day of the new monthly trade cycle, as volume restrictions on the Keystone pipeline meant a glut of crude persisted in western Canadian inventories.

Western Canada Select heavy blend crude for January delivery in Hardisty, Alberta, last traded at $17.35 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers. That was 10 cents wider than Thursday’s settle of $17.25 per barrel below WTI.

The discount on heavy crude blew out to more than $20 a barrel last month after TransCanada Corp’s 590,000 barrel per day Keystone line was shut down for 12 days because of a leak in rural South Dakota.

U.S. regulators gave the pipeline the green light to restart on Tuesday but it must operate at a 20 percent reduction in pressure. The regulator has not said when it can return to full capacity.

Keystone is one of the main conduits between Alberta’s oil sands and U.S. refineries and traders said the shutdown had led to a build in crude inventories in western Canada, pushing heavy crude differentials wider.

Light synthetic crude from the oil sands for January delivery traded at $1.75 per barrel over WTI, little changed from Thursday’s settle of $1.80 per barrel over the benchmark.

Reporting by Nia Williams; editing by Diane Craft