West Texas Sour crude fell to a 50-day low on the spot market as HollyFrontier Corp. was scheduled to begin maintenance at its refinery in New Mexico this month.
HollyFrontier planned to begin work on a crude unit, fluid catalytic cracker and alkylation unit at its 100,000-barrel-a-day Navajo refinery in Artesia, David Lamp, the company’s chief operating officer, said in a conference call Nov. 7. The refinery can process heavy, sour and light, sweet crude and runs a predominant slate of Permian Basin crudes, according to the company’s website.
West Texas Sour, a low-density, high-sulfur oil loaded in Midland, Texas, fell 75 cents to a discount of $18.50 a barrel to West Texas Intermediate in Cushing, Oklahoma, at 3:48 p.m. in New York, according to data compiled by Bloomberg. That’s the largest discount since Nov. 21.
Light, sweet oil in Midland dropped 65 cents to a discount of $13.75 a barrel to the U.S. benchmark crude.
Production in the Permian basin, the largest U.S. oil field, grew to 1.29 million barrels a day in December from an average of 880,000 in 2009, according to a U.S. Energy Department analysis of well data. The increase has outpaced growth in pipeline capacity out of the region, leading to a glut of oil.
The discount of West Texas Sour to WTI averaged $9.36 in the fourth quarter of 2012, lowest quarterly average since Bloomberg began recording prices in 1991.