Gulf Crude Oils Weaken as Texas Pipeline Prepared for Service

Sour crudes produced in the Gulf of Mexico weakened against U.S. benchmark West Texas Intermediate as operators readied a pipeline to the coast and flows increased from the oil hub at Cushing, Oklahoma.

An index of three medium sour crudes produced in the Gulf - - Mars Blend, Poseidon and Southern Green Canyon -- fell $3.12 a barrel to a premium of $12.35 versus WTI as of 2:05 p.m. in New York, the lowest level since Jan. 29, according to data compiled by Bloomberg.

European benchmark Brent has declined against WTI since February, “and this is just the light crudes going with it,” said Sarah Emerson, president of Energy Security Analysis Inc. in Wakefield, Massachusetts. “WTI, in the meantime, has found a little bit of support because we’ve had some takeaway capacity in the midcontinent grow.”

The spread for Brent-WTI narrowed $1.07 today to $13.95 a barrel based on closing prices, the narrowest differential since July 6, according to data compiled by Bloomberg.

Magellan Midstream Partners LP will begin filling the Longhorn pipeline this week, a company spokesman said last week. The reversed line will initially pump as much as 75,000 barrels of crude a day to Houston from Crane, Texas.

Mars Blend, a medium sour crude from the Gulf, weakened by $3.55 to a premium of $13.20 a barrel against WTI. Poseidon’s premium fell $3.05 to $12.60 a barrel. Southern Green Canyon slid $2.75 to a premium of $11.25 a barrel and Thunder Horse weakened by $1.50 to $15 a barrel.

Heavy Louisiana Sweet oil’s premium to WTI weakened $3.10 to $17.40, and Light Louisiana Sweet’s premium narrowed by $2.10 to $17.90 a barrel.

Canadian crude Western Canada Select narrowed its discount to WTI by 50 cents to $16.50 a barrel. Syncrude gained $1.50 to a $6-a-barrel premium.

Index trading for April delivery for the grades ended on March 15. Most of the volume in Canadian grades is traded during the index period, which begins on the first of the month.

Before it's here, it's on the Bloomberg Terminal.