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Canadian oil producers should benefit from more favourable pricing over the long term as the United States moves to scrap a four-decade ban on crude oil exports, although the change will not provide relief from the industry's current painful downturn.

U.S. legislators are poised to lift restrictions on shipping domestic oil to overseas markets. This is expected to bring North American prices – which have been relatively depressed because of a continental glut – more in line with international benchmarks.

With their export market largely confined to the United States, Canadian producers have also suffered from the price discrepancy, which widened to as much as $10 (U.S.) a barrel in recent years.

Analysts expect it could be well over a year before shipments begin in a big way because global oil markets have been collapsing as a result of oversupply.

However, selling some of the U.S. excess abroad will eventually help ease a continental surplus that has ballooned with surging domestic production.

"If lifting the export ban lifts the wellhead price of crude in the U.S., that's going to translate across the entire network of North America, including Canada," said Skip York, an analyst at energy consultancy Wood Mackenzie.

"The challenge is, in the current price environment, the differential between international and U.S. crudes … is so narrow that it's not economic to export from the U.S. today."

Industry aggressively lobbied U.S. lawmakers to end the 40-year prohibition, which was put in place after the first Arab oil embargo of 1974. But U.S. producers will be hard-pressed to win new overseas sales as OPEC giants such as Saudi Arabia, Iraq and Iran compete aggressively to defend and expand their markets.

Iran is expected to boost its production early in the new year as it moves aggressively to satisfy the conditions of a nuclear deal with western powers and escape from the sanctions regime that has choked its economy. Iran has an estimated 36 million barrels in floating storage, says Helima Croft, New York-based analyst with Royal Bank of Canada, and the release of that inventory will keep downward pressure on global crude prices in 2016.

On Wednesday, the U.S. Congress appeared close to agreeing on a spending and taxation bill that includes the measure to lift the ban on oil exports.

Many U.S. energy producers had argued that rapid growth in shale-oil production creates a glut within North America that has kept prices low in comparison to international benchmarks. Some refiners, which have enjoyed wide profit margins because of the discounted oil, have said the ban should remain in place.

The legislation must be approved by the House of Representatives, Senate and President Barack Obama.

The existing rules allow U.S. oil exports to Canada, and supplies from regions such as the Bakken shale in North Dakota have been shipped by rail to refineries in Eastern Canada. As well, refineries in New Brunswick and Quebec have been importing crude by ship from the U.S. Gulf Coast.

U.S. data on Wednesday showed the extent of the oversupply, which remains despite a massive drop in drilling over the past year as crude prices collapsed. In its most recent weekly tally, the Energy Information Administration reported inventories rose by 4.8 million barrels, the 11th increase in 12 weeks. This came amid a jump in imports.

The price of West Texas Intermediate crude sank to $35.52 a barrel on Wednesday, while Brent traded at $37.19.

It is unlikely that U.S. supplies will provide future competition to Canadian exports, given the different grades of crude. Canada's supply from the oil sands is largely heavy, requiring more complex refining than the light shale oil from the Bakken and Texas regions such as the Eagle Ford.

U.S. Gulf Coast refineries that have been buying increasing volumes of Canadian heavy oil will still require that supply, Mr. York said.

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