By Nia Williams
CALGARY, Alberta, June 1 (Reuters) - Canadian heavy crudedifferentials tightened to the narrowest level in more than fiveyears on Monday as wildfires continued to burn in northernAlberta, shutting in around 10 percent of total oil sandsproduction.
Western Canada Select heavy blend for July delivery lasttraded at $7.10 per barrel below the West Texas Intermediatebenchmark, according to Shorcan Energy brokers.
That compares with a settlement price of $7.95 per barrelbelow the benchmark on Friday.
Roughly 233,000 barrels per day of oil sands crude has beenoffline for more than a week as a result of the Albertawildfires, with no indication of when that lost production willresume.
Planned maintenance at MEG Energy's Christina Lakeproject and Devon Energy's Jackfish 1 project willfurther cut into supply this month.
In a note to clients, Barclays analysts said they expectedtotal Canadian crude oil output, including conventional andsynthetic crude production, to have slumped in May, down from4.6 million bpd in January.
"We expect Canadian crude production in May to be the lowestin nearly two years as a perfect storm of events curtailsoutput. Upgrader maintenance and wild fires in Alberta are expected to bring output temporarily below 4 million bpd,"Barclays analysts wrote.
Light synthetic crude from the oil sands for July deliveryedged slightly lower to $3.40 per barrel above WTI, down from$3.50 per barrel above the benchmark on Friday, as tradersanticipated an end to recent supply outages.
Planned second-quarter maintenance on a number of oil sandsupgraders including Royal Dutch Shell's Scotford,Alberta, facility and Coker 8-3 at the Syncrude oil sandsproject has either finished or is in the process of finishing.
Upgraders process mined bitumen into refinery-readysynthetic crude.
Canadian Oil Sands Ltd, the largest-interest ownerin Syncrude, said the project averaged 138,700 bpd in May as aresult of maintenance, well below the year-to-date average of232,000 bpd. (Editing by Marguerita Choy)
