Both Light and Heavy Louisiana Sweet oils strengthened versus domestic benchmark West Texas Intermediate as other Gulf crudes weakened.
Premiums for Light and Heavy Louisiana Sweet rose 20 and 10 cents, respectively, against WTI, to $9.40 and $9.60 a barrel as of 1:57 p.m. New York time, according to data compiled by Bloomberg.
Six other oils produced in the Gulf of Mexico fell, led by Poseidon, which dropped $1.30 to $2.60 a barrel, its lowest premium since Jan. 21, 2011, after WTI strengthened against Brent. The discount for the U.S. benchmark versus its European counterpart narrowed 63 cents to $7.55 a barrel based on settlement prices. Gulf crudes compete for space in U.S. refineries with foreign oils priced against Brent.
The two Louisiana Sweet grades are stronger than other Gulf crudes when WTI strengthens against Brent because they are increasingly used as hedges for South American and Central American crudes, said Carl Larry, Houston-based president of Oil Outlooks & Opinions LLC.
“You really have to look at HLS and LLS as the U.S. Brent,” Larry said. “LLS and HLS will still be able to find strength when WTI rallies, or when Brent comes in to WTI.”
Southern Green Canyon weakened by 50 cents to a $2 premium. Mars Blend’s premium to WTI lost 60 cents to $3.40 a barrel.
The premium for Thunder Horse, which has a lower sulfur content than Mars, Poseidon and Southern Green Canyon, weakened by 55 cents to $5.90 a barrel.
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