(Corrects unit in fourth paragraph.)
West Texas Intermediate crude on the spot market in Midland, Texas, rose to its first premium since 2010 to oil in Cushing, Oklahoma, as a pipeline connecting the Permian Basin to the Gulf Coast prepares to start.
Magellan Midstream Partners LP (MMP) expects in mid-March to begin filling its reversed Longhorn pipeline system, which will carry crude to the Houston area from Crane, Texas, said Bruce Heine, a Tulsa, Oklahoma-based spokesman for the company. The pipeline will begin deliveries of about 75,000 barrels a day in mid-April and expand to 225,000 in the third quarter.
“When the Longhorn starts up, that’s the important one for the Permian, and I expect line fill is currently going on now,” said Amrita Sen, chief oil market analyst for Energy Aspects Ltd. in London. “Essentially, the Permian is starting to clear up as these phase-one pipelines come online.”
WTI in Midland strengthened by 45 cents to a premium of 10 cents a barrel to crude in Cushing at 12:14 p.m. New York time, according to data compiled by Bloomberg. It’s the first premium since May 21, 2010.
West Texas Sour in Midland strengthened by 60 cents to 25 cents a barrel below WTI in Cushing, the smallest discount since April 21, 2009.
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