Light Louisiana Sweet crude strengthened against West Texas Intermediate after Enterprise Products Partners LP (EPD:US) said that terminal constraints on the Seaway pipeline will last until late 2013.
Seaway, which was reversed last summer to relieve a historic oil glut in the center of the U.S. by moving the crude to the Gulf Coast, will have limitations at its terminus in Texas until a new pipeline lateral is done, Enterprise said. The discount for WTI oil at Cushing, Oklahoma, the U.S. benchmark, widened to the most in three weeks against Brent oil.
“This was about Seaway not being able to expand their outbound capacity,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “WTI clearly came under pressure.”
Light Louisiana Sweet’s premium to WTI widened 35 cents to $18.20 a barrel as of 12:17 p.m. in New York, according to data compiled by Bloomberg. Heavy Louisiana Sweet added 35 cents to $18.10 a barrel over WTI.
Restrictions at Seaway’s Jones Creek terminal in Texas, which was limited on Jan. 23 to 175,000 barrels a day, will be alleviated when Enterprise finishes the new pipeline lateral to its Echo terminal in Houston, Bill Ordemann, Enterprise’s vice president for crude and natural gas, said on a conference call.
Oil supplies at Cushing, the delivery point for New York- traded futures, reached a record 51.9 million barrels on Jan. 11, according to the Energy Information Administration, the Energy Department’s statistical arm. They were at 51.8 million last week, the EIA reported yesterday.
U.S. crude production climbed 19 percent last year, driven by advances in fracking and horizontal drilling.
“If the Seaway pipeline is limited with offtake via Jones Creek, that is going to limit the ability to draw down inventory at Cushing in the face of ever-increasing midcontinent oil production,” Lipow said.
WTI’s discount to Brent widened more than $1 to $18.17 a barrel at 2:02 p.m. New York time. When WTI weakens and Brent strengthens, it typically boosts the value of U.S. grades that compete with foreign oils priced using the European benchmark.
Poseidon oil’s premium to WTI widened 35 cents to $13.35. Mars Blend’s strengthened 20 cents to $13.10 a barrel over WTI, and Southern Green Canyon’s grew 25 cents to $13.
The premium for Thunder Horse, a sour crude with lower sulfur content than Mars, Poseidon and Southern Green Canyon, widened 50 cents to $15.50 above WTI.
Western Canada Select’s discount to the U.S. benchmark narrowed 25 cents to $31.75. Syncrude, a Canadian light synthetic oil processed from oil sands, strengthened 10 cents to a premium of 85 cents a barrel.
West Texas Sour’s discount to WTI widened 25 cents to $4.75 a barrel. WTI in Midland was $2.75 less than WTI in Cushing, weaker than yesterday’s $2.60 discount.
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