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World oil prices are recovering, but Western Canadian oil prices are falling back to depressed conditions, the result of transportation capacity so tight every twitch in the system appears to be blowing out the discount.

Western Canadian Select (WSC), the Canadian benchmark, was changing hands for $33.57 a barrel Tuesday, after losing about $8 in two days, while West Texas Intermediate (WTI) was trading for US$64.75, up US$1.35 over the same period.

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Canada exports approximately 3.2 million barrels of oil a day to the United States of different qualities. The discount means a daily loss of tens of millions in revenue, taxes and royalties for Canadian producers and governments, and a corresponding gain for their counterparts in the U.S., its only export market.

We are looking for strategic partners with long-term objectives that allows us to have a more stable book of business CP Rail CEO Keith Creel

The latest scare to push down Canadian oil prices came from Canadian Pacific Railway Ltd. late last week, which said it has no interest in carrying big quantities of Western Canadian oil while producers wait for pipelines to get built.