* Gulf Coast sweet-sour differential below $3.50
* Valero Memphis refinery down, prompting LLS dumping
* Outage comes atop Strategic Petroleum Reserve sales
* Mars already stronger as outright prices have risen
* Refiners seek cheaper crudes to maintain margins
HOUSTON, Aug 9 Mars sour MRS- closed to
within $3.50 of Light Louisiana Sweet on Tuesday as an outage
at Valero's Memphis refinery added drag to Strategic Petroleum
Reserve sales of sweet.
The spread between LLS and Mars more typically is in the $5
to $7 range, but cheaper Mars already was strong against LLS
due to refiners' needs to control costs.
Valero (VLO.N) said on Monday units at its
180,000-barrels-per-day Memphis refinery were down due to a
fire on Friday, with no estimate of restart. The refinery uses
LLS. [ID: nWNAB7032]
LLS dealt for $23.15 a barrel over West Texas Intermediate
CLc1 early on Tuesday, up 15 cents from the end of the
Mars Sour sold for a premium of $19.75, weaker by 25 cents
than the previous session.
That left Mars some $3.40 weaker than LLS. SPR sales of
light, sweet crude from Gulf Coast caverns have contributed to
the LLS weakness, analysts have said.
(Graphic of LLS vs Mars: link.reuters.com/hug23s )
Cash crude spreads generally have tightened as oil prices
touched record highs. Refiners have been buying cheaper grades,
blending with shale oil and avoiding LLS, analysts have said.
The LLS-Mars differential narrowing came as many traders
were away from their desks at an industry event in Chicago and
dealing was described as "dead".
"Once futures popped back up this morning, folks took money
off the table in a quiet cash market and are waiting for
another opportunity to reset their positions," said Carl Larry
of Blue Ocean Brokerage.
The transatlantic spread CL-LCO1=R hovered around $22.50
in favor of Brent shortly after midday, virtually unchanged
from Monday's settlement, after hitting a record $23.79 in
volatile trading earlier in the day.
ICE Brent crude for September LCOU1 rose 79 cents to
$104.53 a barrel by 12:30 p.m. EDT (1630 GMT), having bounced
as high as $105.95 after falling $5 to $98.74, the lowest
intraday price since Feb. 8.
U.S. September crude CLU1 rose 78 cents to $82.09 a
barrel, having bounced as high as $83.05 after falling to
$75.71, the lowest since prices fell intraday to $75.60 on
Sept. 29, 2010.
Amid the volatility, Brent's premium to U.S. crude
surpassed the previous record of $23.57 reached on July 14.
See [CRU/TU] for recent cash crude deals)
See <REF/MARGIN1> for Reuters' generic refining margins
See CL-1=R for the WTI front/second month spread
See CL-LCO1=R for front month WTI/Brent futures spread
See BFO- for Reuters' assessment of Dated Brent
See <0#FRT-> for Reuters assessed tanker rates
See BRNV for assessed domestic crude differentials
See PPGR for outright U.S. cash crude prices
See [REF/US] for a list of U.S. refinery outages
See [EIA/S] for U.S. EIA inventory reports and forecasts
(Reporting by Bruce Nichols; editing by Dale Hudson)