Gulf Coast oils strengthened after the differential between Brent crude and domestic benchmark West Texas Intermediate widened.
WTI slipped 28 cents to $20.97 a barrel below Brent. Mars Blend’s premium rose $1.45 to $20.45 over WTI, the highest level since Nov. 19, extending an $8.20 rise since Jan. 29, according to data compiled by Bloomberg.
“That’s because the Brent-TI spread widened,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
For much of January, Mars sold for less than a $14 premium to WTI. WTI’s discount to Brent narrowed after the Seaway pipeline expansion began taking more crude from Cushing, Oklahoma, to the Gulf Coast, easing a glut of supply in the U.S. Midwest.
This month, the gaps widened again as expectations for Seaway were let down by flow restrictions and a heavy-to-light mix that its operators say won’t let the line reach its nameplate capacity of 400,000 barrels a day.
Poseidon, another Gulf sour crude, lost 5 cents from its premium to WTI, which reached $19.25 a barrel.
Premiums for both Heavy Louisiana Sweet and Light Louisiana Sweet over WTI increased by 25 cents to $23.25 a barrel for HLS and $23 a barrel for LLS.
“We’re receiving more and more light sweet crude on the Gulf Coast looking for something to blend with,” Lipow said. “People are looking for HLS to blend with Bakken or Eagle Ford to turn it into an LLS-type of barrel.”
Thunder Horse, a sour crude with lower sulfur content than Mars, lost $1.10 to a $21.40 premium to WTI.
Bitumen-based heavy crude blend Western Canada Select was unchanged at a $26-a-barrel discount to WTI, according to data compiled by Bloomberg. Syncrude, a synthetic light, sweet oil upgraded from bitumen, was unchanged at a $1 premium.
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