Western Canada’s oil price woes are often illustrated by references to the Western Canadian Select benchmark crude oil price.

Alberta Premier Jason Kenney over the weekend released a tweet warning WCS is “now trading at negative prices,” with an illustration showing the price as minus one cent US.

The reality is much more complicated, according to NE2, a physical oil brokerage and derivatives exchange with operations in Calgary and Houston. NE2 says it handled deals involving about 38 per cent of western Canadian oil production in 2019.

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Here’s the firm’s explanation of how it all works.

What is Western Canadian Select?

WCS is a crude oil blend created with oilsands bitumen at the Hardisty, Alta., marketing hub.

Only four firms produce WCS — Canadian Natural Resources Ltd., Suncor Energy Inc., Cenovus Energy Inc. and Repsol — but other local crude blends are priced based on WCS, so its influence extends beyond its usual volume of 350,000 to 400,000 barrels per day.

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