CANADA CRUDE-Discount at widest level in a year on Whiting refinery upset

* Sept WCS trades at $19.40/bbl below WTI

* Sept synthetic trades at $4.25/bbl below WTI

By Nia Williams

CALGARY, Alberta, Aug 10 (Reuters) - Canadian heavy crude differentials hit their widest level in a year on Monday after a major refinery in the U.S (Other OTC: UBGXF - news) . Midwest suffered a malfunction over the weekend, dragging the outright of Canadian crude to less than $26 a barrel.

Western Canada Select heavy blend crude for September delivery last traded at $19.40 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy brokers.

That was the widest differential since last August, and compares with a settlement price of $17.75 per barrel below WTI on Friday.

BP Plc's refinery is repairing the largest crude distillation unit at the company's 413,500 barrel per day Whiting, Indiana, refinery after a malfunction shut it down, two sources said on Monday.

Whiting is one of the largest consumers of Canadian heavy crude in the Midwest and differentials widened sharply as traders reacted to the disrupted demand.

The discount on WCS has been widening steadily since June on higher oil sands production, primarily due to the ramp up of Imperial Oil (Toronto: IMO.TO - news) 's Kearl expansion project, and reduced demand because of maintenance at refineries and upgraders.

Some market participants said the differential could remain under pressure in coming weeks as refinery turnaround season gets underway.

"With the asphalt season winding down over the next two months we expect heavy oil differentials to remain relatively wider," BMO Capital Markets analyst Randy Ollenberger said in a note.

The wider differential outweighed a rise in U.S. crude and pushed the outright price of Canadian heavy to around $25.56 a barrel, within sight per barrel operating costs for many producers in Western Canada.

Light (Stuttgart: 5LIA.SG - news) synthetic crude from the oil sands for September delivery last traded at $4.25 per barrel below WTI, widening from Friday when it traded at $3.95 per barrel below the benchmark. (Editing by David Gregorio)