Gulf Coast Crude Oils Strengthen as Shut Pipeline Curtails FlowsEliot Caroom and Dan Murtaugh
Gulf Coast crudes strengthened after Royal Dutch Shell Plc shut a 170,000-barrel-a-day pipeline that moves Gulf of Mexico oil to Houma, Louisiana, following a leak Mar. 23 in Terrebonne Bay.
The 16-inch pipeline carries oil inland from a 20-inch pipeline that gathers crude produced in the Eugene Island, Ship Shoal, Green Canyon and other offshore formations in the Gulf of Mexico.
“The shut line is obviously going to have an effect, but just in general, I think the markets are pretty well bid and are going to stay that way going forward,” said Carl Larry, commodities trader with Houston-based Atlas Commodities, LLC. “You’re going to see all the crudes in the Gulf stay high, especially as oil refineries come back from turnarounds.”
Husky Energy Inc.’s 160,000-barrel-a-day Lima, Ohio, refinery started ramping up after the completion of a turnaround, and work at LyondellBasell Industries NV’s 268,000-barrel-a-day Houston refinery was expected to conclude by the end of March.
Light Louisiana Sweet’s premium to domestic benchmark West Texas Intermediate widened $2 a barrel to $20 as of 12:01 p.m. in New York, according to data compiled by Bloomberg. Heavy Louisiana Sweet added 50 cents to $18 a barrel over WTI.
Eugene Island oil strengthened 50 cents a barrel to a premium of $16.
Poseidon oil’s premium to WTI widened 25 cents to $12.50. Mars Blend’s strengthened 5 cents to $13.25 a barrel over WTI, and Southern Green Canyon was unchanged at $11.25. The premium for Thunder Horse, a sour crude with lower sulfur content than Mars, Poseidon and Southern Green Canyon, was unchanged at $15 above WTI.
Western Canada Select’s discount to WTI was unchanged at $16.50, according to data compiled by Bloomberg. Syncrude, a Canadian light synthetic oil processed from oil sands, weakened 50 cents to a premium of $5.50 a barrel.
Index trading for April delivery for the Canadian grades ended on March 15. Most of the volume in the grades is traded during the index period, which begins on the first of the month.