Heavy, sour oils on the Gulf Coast weakened relative to the U.S. benchmark as refineries prepared to receive crude from the north via a new pipeline.
Southern Green Canyon oil weakened by $1.80 to a discount of $5.50 a barrel less than West Texas Intermediate at 4:15 p.m., according to data compiled by Bloomberg. The grade is a high-density, high-sulfur crude pumped in the Gulf of Mexico and delivered by pipeline to Nederland, Texas.
Nederland is near the terminus for TransCanada Corp.’s Keystone South pipeline, which will have the capacity to deliver as much as 700,000 barrels of crude a day to the Gulf Coast from Cushing, Oklahoma. The first oil shipments on that pipeline will begin “within the next few weeks,” Alex Pourbaix, the company’s vice president for oil pipelines, said on a conference call Nov. 5.
“Perhaps the weakening is in anticipation of Keystone’s startup,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. Refineries “now have an alternative with Mid-Continent oil.”
Mars Blend weakened by $1.40 to a discount of $2.50 a barrel to WTI. Poseidon crude’s discount widened by $1.30 to $3.50 a barrel. Thunder Horse eased $1.15 to a 10-cent premium.
Light Louisiana Sweet crude lost 90 cents to a premium of $2.75 a barrel. Heavy Louisiana Sweet weakened by $1 to a $2.75 premium.