West Texas Sour crude strengthened against the U.S. benchmark after a refinery that processes the high-sulfur grade finished maintenance.
WTS, a medium-density crude priced in Midland, Texas, gained 25 cents to a discount of $5.75 a barrel below West Texas Intermediate in Cushing, Oklahoma, at 4:43 p.m., according to data compiled by Bloomberg.
Phillips 66 (PSX) finished planned work at the Borger refinery in north Texas, Rich Johnson, a Houston-based spokesman for the company, said by e-mail. The refinery processes primarily medium, sour crude delivered through pipelines from western Texas, the Texas Panhandle, Wyoming and Canada, according to the company’s website.
WTI in Midland also strengthened against its counterpart in Cushing, narrowing its discount by 25 cents to $4.50 a barrel.
Midland is the closest hub to the Permian Basin, the largest oil field in the U.S. at more than 1.2 million barrels a day, according to the Energy Information Administration.
After hovering near parity with WTI in Cushing for most of this year, Midland prices fell in October amid refinery maintenance and pipeline constraints.
Magellan Midstream Partners LP (MMP) had “downtime” on its Longhorn pipeline in the third quarter because of pump work associated with an expansion planned next year, Chief Executive Officer Mike Mears said during the company’s third-quarter earnings call today. The line carries crude to Houston from western Texas.
Western Refining Inc. (WNR), which operates refineries in Texas and New Mexico, predicts the Midland discounts will last through early next year, executives said in a conference call.
“Our view is that a number of factors come into play impacting the Midland spread,” Gary Hanson, a Tempe, Arizona-based spokesman for the company, said by e-mail. “Things like unplanned downtime of some refineries in Q4, planned maintenance in Q1, the delay of starting some pipelines in the area, and the growth in production in the area. All of these combined will have an impact on the Midland spread through the first quarter of 2014.”
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