Light Louisiana Sweet oil weakened to the smallest premium to the U.S. benchmark in more than three weeks after the Obama administration said a release from the nation’s Strategic Petroleum Reserve is possible.
A release from reserves remains “an option that is on the table” if prices rise or supply is disrupted, Josh Earnest, a White House spokesman, said. No decision has been made and he refused to say if there is active discussion about the reserve.
A release from the inventories, which are stored in salt caverns in Texas and Louisiana, could suppress regional and Brent prices, said John Shages, who was deputy assistant energy secretary for petroleum reserves in President George W. Bush’s administration. The reserves held 262 million barrels sweet oil and 433.9 million barrels of sour oil as of Aug. 3.
Light Louisiana Sweet’s premium to the U.S. benchmark narrowed $1.90 to $16.50 a barrel at 2:02 p.m. in New York, according to data compiled by Bloomberg. That’s the smallest gap since July 23. Heavy Louisiana Sweet decreased $1.60 to $16.40 over WTI.
Poseidon premium slipped $1.60 to a $12.65 premium. Mars Blend decreased $1.40 to $12.65 a barrel over WTI. Southern Green Canyon’s premium narrowed $1.75 to $11.25.
Thunder Horse, a sour crude with lower sulfur content than Mars, Poseidon and Southern Green Canyon, decreased $1.50 to a premium of $15.25.
Syncrude’s premium increased 25 cents to $8.50 a barrel. Western Canada Select’s discount to WTI narrowed by $3.75 to $11.75 a barrel.
Bakken oil from North Dakota lost $1 to a $1-a-barrel discount to WTI.