Sweet and sour crudes priced in Midland, Texas, weakened on the spot market after Sunoco Logistics Partners LP delayed part of a project to move West Texas crude by pipeline to the Gulf of Mexico.
Sunoco Chief Executive Officer Mike Hennigan said a portion of the West Texas Gulf line that would transport 40,000 barrels of Permian Basin crude a day to Nederland, Texas, is being held until Exxon Mobil Corp. restarts its Pegasus pipeline. Sunoco’s plan includes connecting to Pegasus, he said.
Sunoco expects to start another portion of the line, carrying 30,000 barrels a day to Longview, Texas, later this month, Hennigan said today during an earnings call. The company expects to start operating the Permian Express pipeline from West Texas to the Gulf at 90,000 barrels a day in June.
West Texas Intermediate crude in Midland weakened 20 cents to a premium of 5 cents a barrel over the same grade in Cushing, Oklahoma, at 2:01 p.m. New York time, according to data compiled by Bloomberg.
The Midland crude averaged a $4.08-a-barrel discount last year as production from the Permian, the largest onshore oil basin in the U.S., exceeded takeaway capacity. Prices have averaged a 35-cent premium in May as pipelines from Sunoco and Magellan Midstream Partners LP have been expected to start.
West Texas Sour weakened by 25 cents to a 5-cent-a-barrel premium.