June 5, 2012 / 9:02 PM / 5 years ago

Canada crude-Spreads narrow but glut remains

* July light synthetic quoted at $7 under WTI

* WCS done for $24 under WTI

* U.S. Midwest market still seen oversupplied

CALGARY, Alberta, June 5 (Reuters) - Canadian cash crude spreads narrowed on Tuesday, though a persistent oversupply in the U.S. Midwest and other markets pointed to more weakness ahead, market sources said.

Light synthetic crude for July delivery last sold for $7 a barrel under benchmark West Texas Intermediate, compared with $8.75 a barrel under WTI on Monday, according to Shorcan Energy Brokers.

Western Canada Select heavy blend for July was quoted at $24 a barrel under, a $1 narrower discount on the day. Monday’s differential was the widest for WCS since early April.

“There is still a lot of length out there,” a marketing source said, adding that spreads “may widen again.”

Canadian crude prices have weakened since last week, when outages of units at refineries including BP Plc’s 405,000 bpd Whiting, Indiana, plant and Phillips 66’s 146,000 bpd Borger, Texas, facility put an oversupply of Canadian barrels into focus following months of tightening spreads.

Industry sources said on Monday that BP has no restart date set yet for its 75,000 bpd crude distillation unit, which shut down last week.. However, work is complete at Borger, according to ConocoPhillips, which runs the plant in a 50-50 joint venture with Cenovus Energy Inc.

Among other plants, maintenance work continues at Imperial Oil Ltd’s 187,000 bpd Strathcona refinery near Edmonton and at its 121,000 bpd Sarnia, Ontario, facility.

Meanwhile, Canadian barrels compete increasingly for already-tight pipeline capacity with growing supplies of light crude from North Dakota’s booming Bakken region. (Reporting by Jeffrey Jones; Editing by David Gregorio)

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