Alaska North Slope crude on the spot market weakened as the price of foreign imports it competes against for space in West Coast refineries fell.
Brent, the European benchmark, slid to a discount to U.S. West Texas Intermediate in intraday trading today for the first time since Aug. 17, 2010. Brent’s premium to WTI averaged $17.47 in 2012, and traded $23.44 higher on Feb. 8.
ANS competes against foreign oils priced off Brent for space in refineries on the U.S. West Coast. Those refineries have increasingly had to turn to foreign imports and even railroad shipments of oil from the middle of the U.S. to make up for Alaska oil output falling to 523,000 barrels a day in April from a peak of 2.09 million in March 1988.
ANS, a medium, sour crude, weakened by $1 to a premium of $4.50 a barrel more than WTI at 4:33 p.m. New York time, the lowest level since January 2011 according to data compiled by Bloomberg. The premium shrank by nearly half in a week from $8.85 a barrel on July 12.
“This is really all about the Brent-TI spread,” said Andy Lipow, president of Houston-based Lipow Oil Associates LLC. “We’ve seen that in differentials all across the country.”