By Anonymous - Specimen book of the Cleveland Type Founhdry (https://archive.org/details/cataloguebookofs00clevrich/page/306), Public Domain, https://commons.wikimedia.org/w/index.php?curid=81679425
CALGARY — Oil prices are edging higher this week on expectations the U.S. Federal Reserve will cut interest rates, but Western Canadian Select remains under pressure as the discount on Canada’s heavy benchmark widens.
Brent crude rose above $63 and West Texas Intermediate neared $60 on Thursday, buoyed by slower U.S. employment data, a weakening dollar and stalled peace talks between Russia and Ukraine that have tempered hopes of restoring Russian exports. Analysts say expectations of a U.S. rate cut continue to support demand forecasts.
While global benchmarks have gained ground, the Western Canadian Select differential settled at $13 below WTI for January delivery. That is nearly identical to levels seen a year ago. Analysts say it signals markets have fully priced in the benefits of the Trans Mountain expansion, which had narrowed the discount through much of the year.
RBN Energy analyst Martin King says Alberta’s growing oil production is now exerting pressure on differentials. He expects the gap could widen further in late winter as U.S. refineries enter maintenance season, though ample storage in Alberta may buffer the impact in the short term.
The broader outlook remains subdued. The U.S. Energy Information Administration projects global inventories will rise through 2026, keeping downward pressure on prices. The agency forecasts Brent will average $54 in the first quarter of next year and about $55 for 2026. Lower crude prices are expected to push gasoline below $3 a gallon in the U.S. and reduce diesel costs.
Traders are also watching geopolitical risks, including escalating tensions between the U.S. and Venezuela and continued Ukrainian drone strikes on Russian oil infrastructure. These disruptions have trimmed Russian refining output but have not yet tightened global supply enough to alter price forecasts.
Analysts say the combined factors point to modest volatility in the coming months, with global prices supported by monetary policy expectations while Canadian heavy crude continues to face structural constraints at home and abroad.
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