Canada Crude-Heavy grades strengthen as demand boost eyed

CALGARY, Alberta, Sept 2 (Reuters) - Canadian heavy crude differentials narrowed on Tuesday on tightened supply and the possibility of strong demand for the oil to fill a new pipeline project.

In the first day of the September trading window, Western Canada Select heavy blend for October delivery last traded at $14.00 per barrel below the West Texas Intermediate benchmark, according to Shorcan Energy Brokers.

That compares with a settlement price on Friday of $16.35 below the benchmark.

Traders are looking ahead to linefill on Enbridge Inc (Toronto: ENB.TO - news) 's 600,000-bpd Flanagan South pipeline between Illinois and Cushing, Oklahoma, which is expected to take place in October and will boost demand for Canadian crude.

Also on Tuesday, Royal Dutch Shell Plc (Xetra: R6C1.DE - news) said it had restarted a unit at its 100,000-bpd Scotford refinery near Edmonton, Alberta. The company posted a notice of the restart on a community information line but did not provide additional detail.

Maintenance at oil sands projects is also set to cut supply.

Cenovus Energy Inc (NYSE: CVE - news) has a two-week partial turnaround at its 114,000 barrel-per-day Foster Creek oil sands project scheduled, while ConocoPhillips (NYSE: COP - news) is shutting down 30,000 bpd of production at its Surmont project during a four- to five-week turnaround starting on Tuesday..

Canadian Natural Resources Ltd shut down synthetic crude production for 25 days at its 119,000-bpd Horizon project from mid-August in order to complete expansion work.

Light (Other OTC: LGSXY - news) synthetic crude for October delivery last traded at 25 cents above WTI, compared with Friday's settlement price of 65 cents under the benchmark. (Reporting by Scott Haggett; Editing by Grant McCool)