West Texas Sour crude gained to its strongest level in almost 14 months against benchmark West Texas Intermediate after a government report showed that U.S. refineries boosted production.
Refineries operated at 85.1 percent of capacity in the seven days ended Feb. 22, up 2.2 percentage points from the prior week, according to data released today by the Energy Information Administration, the statistical arm of the Energy Department. The median of nine analyst estimates in a Bloomberg survey before the report showed an expected increase of 0.2 percentage point.
“Refinery runs were up significantly, definitely more than the market had thought,” said Andrew Lebow, a senior vice president at Jefferies Bache LLC in New York.
West Texas Sour, a low-density, high-sulfur oil delivered in Midland, Texas, rose $1.25 a barrel to a discount of $1.50 at 2:04 p.m. New York time, the smallest discount for WTS since Jan. 3, 2012, according to data compiled by Bloomberg.
The discount narrowed in the past month as Sunoco Logistics Partners LP (SXL) and Magellan Midstream Partners LP (MMP) prepare to expand pipeline capacity from the Permian Basin to Houston, and after HollyFrontier Corp. (HFC) executives said maintenance at the Navajo, New Mexico, refinery is complete.
Light Louisiana Sweet oil weakened 40 cents to a premium of $20.30 over WTI, and Heavy Louisiana Sweet oil lost 35 cents a barrel to trade at a premium of $20.85.
Eugene Island gained 85 cents a barrel to a $19.10 premium over WTI, and Bonito Sour gained $1 to a $19-a-barrel advantage.
Mars Blend weakened 25 cents to a $16-a-barrel premium over the U.S. benchmark. Poseidon’s premium was unchanged at $16.60 a barrel while Southern Green Canyon’s rose 25 cents to $15.65. Thunder Horse was unchanged at $19 above WTI.
In Alberta, Western Canada Select strengthened 25 cents to a discount of $25 a barrel to WTI and Syncrude strengthened 50 cents, bringing its premium to to $3 a barrel.
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