Gulf Coast crude oils strengthened on the spot market after inventories in the region reached the lowest level in a year.
Heavy Louisiana Sweet’s premium to domestic benchmark West Texas Intermediate widened 20 cents in Cushing to $16.55 a barrel at 2:01 p.m. New York time, according to data compiled by Bloomberg. Light Louisiana Sweet gained 15 cents to $16.45 above WTI.
Stockpiles of crude oil in the Gulf Coast PADD 3 region dropped 3.81 million barrels last week to 158.8 million, the Energy Department’s Energy Information Administration said in its weekly report. The decline was the fifth in a row.
Sour Gulf crude grades also strengthened. Mars Blend gained 30 cents to a $12.55 premium, while Southern Green Canyon gained 25 cents to $12.40 above WTI. Thunder House slipped 45 cents to a $14.80 premium.
The discount of West Texas Intermediate to Brent narrowed to $16.44 a barrel at 1:20 p.m. in New York after reaching $16.10 earlier, the smallest gap since September. The discount narrowed after Enterprise Products Partners LP and Enbridge Inc. resumed service on the 500-mile (805-kilometer) Seaway line to Houston from Cushing, Oklahoma, at its increased capacity of 400,000 barrels a day last week.
“We’ve got Seaway flowing, and I think you’ve got the market positioned for further weakness in the spread,” Stephen Schork, the president of Schork Group Inc. in Villanova, Pennsylvania, said by phone.
Goldman Sachs Group Inc. said in a note this week that the Seaway expansion could narrow the Brent-WTI spread to $6 in the second quarter.
Seaway increased flows to 295,000 barrels a day yesterday, said Hillary Stevenson, a Louisville, Kentucky-based data integrity analyst for Genscape Inc., which monitors electrical output at pumping stations.