On June 2, Canadian heavy crude price discounts tightened due to wildfires in northern Canada disrupting production, forcing shutdowns of nearly 350,000 barrels per day (b/d). Western Canadian Select, traded at Hardisty, Alberta, saw its discount to WTI narrow to $8.50 per barrel from an $8.70 discount on May 30 and a $9.75 discount on May 26, according to Platts, a unit of S&P Global Commodity Insights. However, discounts later increased again, with trading observed at $8.85 per barrel under WTI.
Major producers have had to evacuate workers and cease operations as the wildfires threatened critical oil sands infrastructure. Cenovus announced on June 1 that its Christina Lake asset faced reduced output due to the fires, stating that essential personnel were on-site while production was systematically shut down since May 29, affecting about 238,000 b/d. Meanwhile, MEG Energy has postponed the restart of 70,000 b/d, and Canadian Natural is shutting down 36,500 b/d of bitumen output.
Additionally, Aspenleaf Energy stopped operations on May 26 due to another wildfire, which impacted about 4,000 barrels of oil equivalent per day in Alberta’s Swan Hills. The wildfires have posed significant challenges this spring, with emergency services addressing multiple fires in forested areas containing many oil sands operations. Analysts James Bambino and Richard Joswick from Commodity Insights noted that shifting winds could further threaten crude production, potentially raising the WCS differential.
Moreover, US Gulf Coast refiners may need to rely more on Canadian heavy crude due to U.S. sanctions reducing flows from Venezuela and tightening imports from Mexico. Despite some wildfire impacts in previous years, Western Canadian crude oil production is expected to reach record highs, projected at 5.4 million b/d in 2025 and 5.6 million b/d in 2026.