Syncrude is one of Canada's largest single sources of crude production and produces around 350,000 barrels per day when operating at full capacity, but has slowed output since mid-March when a fire damaged the upgrading facility.

The long-running cuts have propped up light synthetic crude prices for months and had a knock-on effect on Canadian heavy crude, as some producers mix synthetic with their tar-like bitumen to create a heavy crude blend that can flow through pipelines.

The size of the cuts was not immediately clear. Syncrude spokesman Will Gibson declined to comment.

Previously, the plant's majority owner, Suncor Energy (>> Suncor Energy Inc.), said the facility would be back to full capacity by mid-July. News of further delays sent prices surging higher.

Synthetic prices for August delivery last traded at 75 cents per barrel over the West Texas Intermediate benchmark, having settled at 35 cents per barrel over WTI on Tuesday.

July synthetic barrels leapt to $1.50 over WTI, up from a settlement of 90 cents the previous day.

Canada's oil sands produce around 2.5 million barrels per day, of which Syncrude contributes roughly 14 percent. In June the mining and upgrading project produced around 4.8 million barrels, according to sources, well below its usual capacity of about 11 million barrels a month.

Earlier this year oil sands operators ConocoPhillips (>> ConocoPhillips) and CNOOC (>> CNOOC Ltd) subsidiary Nexen Energy were forced to cut their heavy oil output because of tight synthetic supplies, helping push the discount on benchmark Canadian heavy barrels to the tightest level in nearly two years.

Neither company immediately responded to requests for comment on Wednesday on whether they were affected by the additional Syncrude cuts.

Other projects in northern Alberta that can supply synthetic crude include Suncor Energy's base plant and Canadian Natural Resources Ltd's (>> Canadian Natural Resources Limited) Horizon plant.

Western Canada Select heavy blend crude for August delivery last traded at $9.75 per barrel below WTI, 5 cents wider than Tuesday's settle.

(Editing by Marguerita Choy and Matthew Lewis)

By Nia Williams and Catherine Ngai