Gulf Crudes Weaken Against WTI After Cushing Stockpiles TumbleDan Murtaugh
Light Louisiana Sweet and other Gulf of Mexico crudes weakened relative to West Texas Intermediate after supplies at WTI’s home in Cushing, Oklahoma, fell and refinery rates increased.
The premiums for LLS and Heavy Louisiana Sweet dropped after the Energy Information Administration reported that Cushing stockpiles fell by 1.83 million barrels, the most in four weeks, to 34.8 million on Aug. 30. Supplies at the hub have fallen from a record 51.9 million on Jan. 11. Refinery utilization rose to 91.7 percent, a six-week high.
LLS’s premium to WTI narrowed 75 cents to $3.65 a barrel at 3:49 p.m., according to data compiled by Bloomberg. HLS weakened by 30 cents to a $4.60 premium.
Declining stockpiles in Cushing strengthen land-locked WTI against waterborne crudes like the European benchmark, Brent, and oils from the Gulf. The WTI-Brent differential narrowed to $6.89 from $7.68 yesterday.
“We could see some near-term tightening on that WTI-Brent spread,” said Adam Wise, who helps manage a $6 billion oil and gas bond portfolio as a managing director at Manulife Asset Management in Boston. “Refinery utilization is up a bit week-over-week, so there’s a stronger draw that which could be price supportive of WTI.”
Sour crudes from the Gulf also slipped against WTI. Mars Blend weakened by 60 cents to a discount of 25 cents. Poseidon’s discount widened by 95 cents to $1.25. Southern Green lost 60 cents versus WTI to a $1.50 discount. Thunder Horse crude weakened by 35 cents to a premium of $2.25.