(Reuters) – U.S. Gulf Coast crude grades rose on Wednesday as the WTI-Brent spread widened and as a new report showed oil stockpiles in Texas shrank over the past week, traders said.
The coastal grades strengthened as the spread between U.S. crude and global benchmark Brent widened to as much as $8.58 per barrel. A widening spread encourages U.S. crude exports as domestic crude becomes cheaper compared with international oil.
Crude oil inventories in Texas fell 1.6 million barrels compared with last week, traders said, citing a report by market intelligence firm Genscape earlier this week.
With Saudi Arabia and its OPEC allies expected to send less crude to the United States in coming weeks, “imports are going to be a lot lighter the next few weeks, and that’s supporting grades too,” one trader said.
The Genscape report helped strengthen West Texas Intermediate at East Houston, also called MEH, which traded on Wednesday at a $5.15 per barrel premium to U.S. crude futures, compared with a $4.50 premium on Monday.
Coastal grades in Louisiana rose with Mars Sour’s premium firming to $3.45, up from $2.70 on Monday. Light Louisiana Sour’s premium (LLS) climbed from $4.75 to $5.40, traders said.
Cash crude differentials along the U.S. Gulf Coast weakened last week as the WTI-Brent spread narrowed to $6.87 per barrel, the smallest discount for U.S. crude since August.
U.S. crude futures rose $1.97 to $47.38 per barrel at midday on Wednesday. Brent rose $2.07 to $55.87.
Reporting by Collin Eaton; Editing by Bernadette Baum