* September WCS trades at $21.75/bbl below WTI
* September synthetic trading at $2.25 premium over WTI
CALGARY, Alberta, Aug 2 (Reuters) - Canadian heavy crudeprices fell on Friday as a result of increased oil sandsproduction and expectations of weaker demand from refineries.
Western Canada Select heavy blend for September deliverylast traded at $21.75 per barrel below the West TexasIntermediate benchmark, according to Shorcan Energy brokers.
That compares with a settlement price of $20.10 per barrelbelow the benchmark on Thursday and is well below the 2013 highsof around $10 per barrel below WTI hit in June.
Market sources said supply looked plentiful as a result ofImperial Oil's new Kearl oil sands project and newsthat Suncor Energy Inc's July oil sands productionlikely rose to a record 390,000 barrels per day.
"That has grabbed the market's attention. There are signsthat supply is finally picking up again," said Martin King, ananalyst at FirstEnergy Capital.
Some traders said work was proceeding more slowly thanexpected on enabling BP Plc's 413,000 bpd refinery inWhiting, Indiana, to take more Canadian heavycrude.
Earlier this week BP said it expects a sulfur recovery unitand a hydrotreater to come on line in the third quarter, and acoker in the fourth quarter. When all units are up and running,the refinery will be able to run 80 percent heavy sour crude.
Demand could also dip as a seasonal slowdown for refinerymaintenance approaches in the autumn, FirstEnergy's King said.
Shell Canada is planning a full turnaround at its100,000 bpd Scotford, Alberta, refinery. The refinery runs lightsynthetic crude that has been mined and upgraded at Shell'sAthabasca oil sands project.
Light synthetic crude from the oil sands for Septemberdelivery last traded at $2.25 above WTI, compared with asettlement price of $2.50 above the benchmark on Thursday.
