Valero expects narrowed crude spreads to widen again
HOUSTON, July 23
HOUSTON, July 23 (Reuters) - Valero Energy Corp, the largest U.S. independent refinery, expects narrowed discounts of light and some heavy sour crudes to others to widen again, leaving rail as a viable option for moving oil, an executive said on Tuesday.
Chief Operating Officer Joe Gorder said on a call with analysts that Valero's leased railcars "provide us a hedge on the downside" when narrowed spreads squeeze make moving crude by rail less profitable as such transporation is more expensive than pipelines.
"But we fully expect these markets go back to a more normal pricing," Gorder said. He said those spreads will widen as more pipeline capacity comes online to move Texas crude to the U.S. Gulf Coast and increased production stabilizes crude draws from the U.S. crude futures hub at Cushing, Oklahoma.