NEW YORK: US cash crude differentials weakened on Wednesday as oil futures eased and the spread between Brent and US crude futures narrowed.
Brent's premium to US crude fell to $16 a barrel based on April contract settlements, narrowing after ending at $17.11 on Tuesday.
The premium fell during the session to $15.79, the lowest since Jan. 23, the day US crude futures fell 1.5 percent on news that flows on the recently expanded Seaway crude oil pipeline were reduced.
Usually the wider the arbitrage - currently Brent's premium to US crude - the more supportive for US cash crude differentials, especially for sweet grades that are priced in line with other global waterborne crudes like Brent.
Brent crude prices fell 1 percent on Wednesday, pressured by a larger-than-expected increase in US crude inventories, a trimmed demand forecast from the International Energy Agency and a stronger dollar. US crude settled only 2 cents lower.
CASH CRUDE TRADES
Light Louisiana Sweet for April delivery traded at $19.75 and $19.80 a barrel above US April crude, also known as West Texas Intermediate (WTI), the light sweet crude futures contract's benchmark grade deliverable at Cushing, Oklahoma.
The differential weakened after LLS traded on Tuesday from $20.00 to $20.40 over the futures benchmark.
A Gulf of Mexico-produced grade, Mars sour crude, traded at $14.70 and $14.75 over the benchmark futures, weaker after Tuesday's trades from $14.80 to $15.10 over the benchmark.
Thunder Horse crude traded at $18.00 above the benchmark WTI, weaker after trades on Monday and last Friday at $19.00 over WTI.
Southern Green Canyon traded at $12.75 over the benchmark WTI, weaker after Tuesday's trade at $13.25 over WTI.
Differentials for Midland cash crude grades weakened on Wednesday, after strengthening this week anticipating the reversal of the Longhorn pipeline. The reversal is expected to help alleviate the glut of crude in the US Midwest.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>*
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