Futures fell as weaker Brent prices reduced the cost of foreign oil used by U.S. refiners and of gasoline imports. The 500-mile (805-kilometer) line running from Cushing, Oklahoma, to Freeport, Texas, has resumed full service after shutting Jan. 2 to complete the final connections necessary to expand its capacity to 400,000 barrels a day from 150,000 barrels.
“This is taking the pressure off Brent crude and could translate into lower product prices across the board,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “You’re alleviating the glut, getting it out to the refiners who can actually buy the stuff, and they can put more product out into the global marketplace.”
Gasoline for February delivery fell 5.77 cents, or 2.1 percent, to $2.7356 a gallon at 10:08 on the New York Mercantile Exchange. Prices touched $2.7266, the lowest intraday level since Dec. 24.
The expansion of the line, operated by Enterprise Products Partners LP and Enbridge Inc., is expected to shrink record levels of oil supplies at Cushing and reduce imports to the Gulf Coast. The pipeline, which formerly carried imported crude north to Cushing, was reversed in May and closed Jan. 2 to expand its capacity.
“Products and Brent are significantly weaker than WTI,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “The startup of Seaway will enable increased volumes of Midcontinent crude to reach the Gulf Coast, impacting Atlantic Basin crude oil supplies.”
Brent for February settlement fell $1.62, or 1.5 percent, to $110.27 a barrel on the London-based ICE Futures Europe exchange, the biggest decline since Dec. 6. The European benchmark grade’s premium to West Texas Intermediate shrank $1.01 to $17.06 a barrel, the narrowest gap since Sept. 21.
Heating oil for February delivery fell 3.83 cents, or 1.3 percent, to $3.016 a gallon on the exchange.
The average nationwide retail price for regular gasoline gained 0.3 cent to $3.313 a gallon, AAA said today on its website. That’s the highest price since Dec. 11.
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