Heavy Louisiana Sweet oil strengthened to a five-month high relative to its lighter counterpart as more light U.S. shale oil reaches the state by rail and sea.
HLS strengthened by 40 cents against Light Louisiana Sweet at 1:34 p.m. to a premium of $1.15 a barrel, the highest level since April 4. HLS strengthened by 50 cents relative to West Texas Intermediate to a premium of $2.90 a barrel.
Louisiana received 750,189 barrels of crude from North Dakota in 2012, up from 60,319 in 2011, according to Louisiana Department of Natural Resources data. The state has received 518,932 barrels from North Dakota so far this year. The Louisiana Offshore Oil Port received 2.4 million barrels of oil from Texas in June. LOOP received its first tanker of domestic crude in August 2012.
“The premium for HLS versus LLS is going up as it represents a heavier sweet crude oil that can be blended with the lighter sweet crude oil from places such as the Eagle Ford in order to produce a LLS quality crude oil for sale at St. James,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.
LOOP, the largest waterborne petroleum import terminal in the U.S., last year made modifications to one of its three offshore buoys to allow receipts from smaller domestic vessels, such as those carrying Eagle Ford crude out of Texas. The Port of Corpus Christi, Texas, shipped out 367,921 barrels a day of crude a day in July, up from 3,860 in February 2012, according to data from the port.
NuStar Energy LP can unload 100,000 barrels a day of crude at its rail terminal in St. James, Louisiana. The company mostly receives Bakken oil there, Danny Oliver, senior vice president of marketing and business development, said in June. The company expects to open a second terminal in December.
Shale oil production from areas like the Bakken in North Dakota and Eagle Ford in South Texas have driven U.S. crude production to the highest level since October 1989.