July 2 (Bloomberg) -- Light Louisiana Sweet, the benchmark light crude on the U.S. Gulf Coast, dipped to the lowest premium to West Texas Intermediate in more than 29 months as the spread between U.S. and global oils continued to narrow.
WTI’s discount to Brent, the European benchmark that foreign oils are priced against, shrank as much as 83 cents to $4.18 a barrel, the lowest intraday level since Jan. 10, 2011.
Prior to 2011, WTI averaged a slight premium to Brent. As domestic production from shale formations has boomed in recent years, inventories in Cushing, Oklahoma, the delivery point for WTI futures, more than tripled and WTI fell to a discount that reached a record $27.88 on Oct. 14, 2011.
The spread narrowed from $23.18 on Feb. 8 as new pipelines drew crude from Cushing, reducing supplies. It fell below $5 yesterday for the first time since January 2011 after BP Plc brought its refinery in Whiting, Indiana, to full rates running light, sweet crude.
LLS and other Gulf crudes compete with foreign oils priced against Brent for space in U.S. refineries. LLS narrowed by 40 cents to a $6.70-a-barrel premium to WTI at 2:07 p.m. That’s the lowest level for the premium since Jan. 13, 2011.
Heavy Louisiana Sweet weakened by 30 cents to $6.60 a barrel more than WTI. Mars Blend’s premium fell by 40 cents to $1.10. Poseidon weakened by 30 cents to a premium of 40 cents a barrel more than WTI, and Thunder Horse weakened by 50 cents to a $4.25-a-barrel premium.
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