Sept 8 (Reuters) - The discount on Western Canada Select

to North American benchmark West Texas Intermediate futures

narrowed on Monday.

WCS for October delivery in Hardisty, Alberta, settled at

$11.40 a barrel under the U.S. benchmark WTI, according to

brokerage CalRock, compared with $11.50 a barrel discount on

Friday.

* Monday's close was the narrowest discount for WCS since

late

July. Discounts widened in August due in part to the shutdown of

BP's 440,000-barrel-per-day refinery in Whiting, Indiana,

which had been affected by flooding after a severe thunderstorm.

The refinery is often the single largest purchaser of Canadian

crude.

* Still, WCS discounts are not expected to be as narrow in

the

second half of the year as they were this spring. Western

Canadian crude production continues to grow, with the

oil-producing province of Alberta hitting a new record of 4.3

million barrels per day in July. Increased output will drive

increased utilization of the country's export pipelines,

analysts say.

* Another factor supporting increased widening is the threat

of

competition from Venezuelan heavy crude exports to the U.S. Gulf

Coast, which resumed last month due to easing of U.S. sanctions.

* Oil prices settled higher on Monday, recovering some of

last

week's losses, after producer group OPEC+ opted for a modest

output hike and investors priced in the possibility of more

sanctions on Russian crude.