Canada crude -Heavy and synthetic grades weaken further

Reuters

* November WCS trades at $33.50/bbl below WTI

* November synthetic trades at $12.50/bbl below WTI

CALGARY, Alberta, Oct 3 (Reuters) - Canadian cash crudeprices weakened on Thursday, extending losses due to robustproduction from the oil sands and decreased demand byrefineries.

Western Canada Select heavy blend for November delivery lastsold for $33.50 per barrel below the West Texas Intermediatebenchmark, according to Shorcan Energy brokers.

That compares with a settlement price of $32.85 per barrelbelow the benchmark on Wednesday.

Light synthetic crude from the oil sands for Novemberdelivery last traded at $12.50 per barrel below WTI, comparedwith a settlement price on Wednesday of $11.75 below thebenchmark.

A ramping up of production at Imperial Oil's Kearlproject and strong output from Syncrude's northern Alberta oilsands project have pushed differentials wider in recentweeks.

Production from Canada's largest energy company SuncorEnergy Inc dipped in September however, falling 16percent month-on-month to 365,000 barrels per day as a result ofmaintenance at its U2 upgrader.

Market players said weaker refining margins meant there wasless demand from refineries, while Shell Canada's 100,000 bpd Scotford, Alberta, refinery, is also undergoing afull turnaround.

"Margins are diminishing so refineries have lowerutilization than in the last two or three months, which isputting pressure on pricing," one Calgary crude trader said.

"As we get more and more production coming out there arealso logistical issues."

Pipeline company Enbridge Inc increasedapportionment on its export network in October, and some marketsources said there were concerns there could be more rationingahead.

Higher apportionment can push differentials wider onconcerns that crude will get bottle-necked in Canada. Lastwinter congested export pipeline capacity and growing productionmeant WCS at times traded more than $40 per barrel below WTI, inwhat the Alberta government termed the "bitumen bubble".

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