HOUSTON (Reuters) - Two 550,000 barrel cargoes of U.S. sweet domestic crude were on offer priced at a 50 cent per barrel discount to the price of global benchmark Brent crude, trade sources told Reuters on Friday.
This is the first crude seen on offer to come off the reversed Seaway pipeline, which will start carrying crude from the oil hub of Cushing, Oklahoma into the Houston area next week.
The crude was for delivery at Jones Creek, the terminus of Seaway on the Gulf Coast, or at Texas City or “some other Houston area discharge port,” via pipeline links, sources said. Seaway branches to Texas City.
The price - 50 cents under Brent - signals the increasing irrelevance of WTI futures for pricing crude on the Gulf Coast. Normally, crude on the Gulf Coast prices against WTI.
Details of the offer were unclear, and information about them was still unfolding.
The clear attraction of WTI to Gulf Coast refiners is that, because of inability to get crude to the Gulf Coast from Cushing until now, WTI has been steeply discounted to Brent. The spread stood at $15.50 in favor of Brent late Friday morning.
The market has been awaiting the effects of the first flow of crude to the Gulf Coast directly from Cushing, and cash crude price action this week has suggested it was already happening.
Light Louisiana Sweet, the flagship Gulf Coast crude, has fallen as much as $2 below the transatlantic spread - in effect, Brent - even as grades generally strengthened.
Seaway, which for decades flowed north from Jones Creek to Cushing when U.S. imports of crude were more important than currently, is scheduled to start flowing the opposite way on May 17, operator Enterprise Products has said.
Reporting By Janet McGurty and Bruce Nichols Jeffrey Jones Jeffrey Kerr; Editing by Marguerita Choy and David Gregorio