NEW YORK: Most cash crude differentials in the United States weakened on Tuesday, the third day of the "roll" period in the cash market, while the transatlantic spread between Brent and US crude futures narrowed, traders and brokers said.
The roll is the three-day period after the expiration of a front-month US light sweet crude contract. The front-month US July crude contract expired on Thursday.
Trading was light as market participants wrapped up July purchases and sales, traders and brokers said.
Brent crude's premium to US crude <CL-LCO1=R> ended at $5.94 a barrel based on August contract settlements. The spread between those contracts ended at $5.98 on Monday, much narrower than Friday's finish at $7.22.
Brent's spread premium fell to $5.60 intraday on Tuesday, the narrowest since November 2011. The premium was as high as $6.47 on Tuesday.
Usually, the wider the arbitrage, the more supportive it is for US cash crude differentials, while a narrower spread often pressures differentials. This especially holds true for sweet grades, which are priced in line with global waterborne crudes such as Brent.
The spread between front-month Brent and US crude contracts reached $10.01 intraday on June 5.
Crude futures ended only slightly higher on Tuesday after seesawing, as equities were lifted by stronger US economic data, providing support for oil.
On Monday, US crude jumped 1.5 percent after flooding late last week shut pipelines transporting Canadian crude to the United States.
Enbridge Inc has returned to service a large section of its 540-km (335-mile) Athabasca oil pipeline in Alberta and the company said other lines are expected back soon.
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