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Reduced Capacity on Seaway Pipeline Boosts Brent Premium to WTI

Enterprise Products Partners LP (EPD) told shippers today that capacity was limited on its expanded Seaway Pipeline, widening the spread between domestic benchmark West Texas Intermediate crude and Brent.

The WTI-Brent differential widened by $1.83 a barrel to $17.57 based on today’s settlements. Enterprise said the limited capacity was due to “unforeseen constraints in outbound takeaway” at the Jones Creek terminal.

“Now the question is how long it’s going to take before the takeaway capacity gets cleared up,” said Stephen Schork, the president of Schork Group Inc. in Villanova, Pennsylvania, by phone.

The spread, which reached $26 in intraday trading Nov. 15, narrowed to less than $16 last week.

The 30-inch (76-centimeter) line, which runs from Cushing, Oklahoma, to Freeport, Texas, reopened on Jan. 11 with capacity expanded to 400,000 barrels a day. On Jan. 16, the flow had increased to 301,000 barrels a day, according to Hillary Stevenson, a Louisville, Kentucky-based data integrity analyst for Genscape Inc., which monitors pumping stations.

Inventories at Cushing, the delivery point for futures traded on the New York Mercantile Exchange, reached a record 51.9 million barrels on Jan. 11, according to the Energy Information Administration, the statistical arm of the Energy Department. Stockpiles there were expected to fall with the opening of Seaway.

“What you’re seeing now is, here we go again, the template is set for the glut up in Cushing to blow out again,” Schork said.

To contact the reporter on this story: Eliot Caroom in New York at ecaroom@bloomberg.net

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

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