Low-sulfur oil delivered from the soon-to-be reversed Seaway pipeline is being offered in the U.S. Gulf Coast for June delivery.
The crude is offered at July Brent minus 50 cents a barrel, Andy Lipow, president of Lipow Oil Associates LLC in Houston, said in a telephone interview.
Enterprise Product Partners LP (EPD) and Enbridge Inc. (ENB) are reversing the pipeline and on May 17 will begin shipping oil from the storage hub at Cushing, Oklahoma, to the Gulf. It is expected to narrow the discount of inland U.S. grades to imports and Gulf Coast production.
The first phase will carry 150,000 barrels a day on the 500-mile (800-kilometer) line, with subsequent phases expanding capacity to 850,000 barrels a day by mid-2014. The initial transit time will be about 15 days, Rick Rainey, a Houston-based spokesman for Enterprise, said in April.
The lack of a pipeline from Cushing, Oklahoma, to refineries and ports in the Gulf Coast has created a glut of oil in the storage hub and depressed prices of certain grades produced in the Bakken shale and Canadian tar sands.
West Texas Intermediate crude for July delivery traded at a $15.06 discount to international benchmark Brent at 12:24 p.m. The oil from Seaway is being offered in the Houston area at about $14.50 over WTI delivered in Cushing, and about 80 cents over Light Louisiana Sweet, a similar quality oil delivered in the Gulf, based on data compiled by Bloomberg.
In April, Enterprise and Enbridge proposed transport rates from $2 to $4.32 a barrel between Oklahoma and the Gulf, depending on grade and contract length, according to a filing with the U.S. Federal Energy Regulatory Commission.
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