Crude produced offshore in the Gulf of Mexico weakened as U.S. benchmark oil strengthened against overseas imports.
The spread between U.S. West Texas Intermediate and Brent, the global overseas oil benchmark, tightened 21 cents to $18.01 a barrel at 1:24 p.m. New York time, the smallest gap since September.
Brent is expected to lose some of its premium over WTI as the Seaway pipeline connecting the U.S. supply hub at Cushing, Oklahoma to refineries on the Gulf Coast, increases to 400,000 barrels a day from 150,000 a day this week. As Brent’s premium declines, domestic crudes are more attractive to refiners compared with imports.
“I think that we will see this trend continue now that the expansion is imminent,” said Andy Lipow, President of Lipow Oil Associates LLC in Houston.
Enterprise Products Partners LP (EPD:US) and Enbridge Inc. (ENB) plan to resume service on the 500-mile (805-kilometer) Seaway link at the 400,000-barrel-a-day rate late this week, Houston-based spokesman Rick Rainey said in an e-mail Jan. 3.
Light Louisiana Sweet’s premium to WTI narrowed by 50 cents to $17.25 a barrel at 12:03 p.m., according to data compiled by Bloomberg. Heavy Louisiana Sweet also lost 50 cents to trade at $17.10 above WTI.
Sour Gulf crude grades also weakened. Mars Blend fell 30 cents to a $13.10 premium, while Southern Green Canyon dropped 35 cents to $13.25 above WTI. Thunder House slipped 10 cents to a $15.40 premium.
Canadian crude grades also weakened against WTI as it gained against Brent. Western Canada Select, a heavy crude grade mainly produced from oil-sands bitumen, fell 85 cents to a $37.75 discount, according to Net Energy Inc., a Calgary oil broker. Syncrude, a synthetic crude oil produced from bitumen, slipped to a 20-cent discount from parity with WTI.
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