May 14, 2012 / 8:12 PM / 7 years ago

US Cash Crude-Seaway reversal starts to bite sweet crudes

* Sweet/sour spread moves in to less than $3
    * LLS trades between $12.20 and $13.25, down from Friday's
$13.70
    * Mars trades at premium of $10.50, flat with Friday
    * Transatlantic spread moves out 66 cents

    By Janet McGurty	
    NEW YORK, May 14 (Reuters) - U.S. cash crude differentials
were weaker for light sweet crudes on Monday as two cargoes of
550,000 barrels of light sweet, domestic crude offered off the
Seaway pipeline were seen pushing down the differential of the
Gulf's benchmark cash crude.
    Changing relationships between sweet and sour crudes are
seen as a result of the reversal of the Seaway crude pipeline
around May 17, which initially will carry 150,000 bpd of crude
out of the oil hub of Cushing, Oklahoma to Gulf Coast
refineries.  
    The first sweet crude on offer from the long-awaited first
of several pipelines to ease the Cushing glut has compressed the
price difference between Mars sour , a light sour blend
with Louisiana Light Sweet .
    "It was also partly the arb combined with a lack of
aggressive buying," said John Troland, independent oil advisor
based in Houston.
    "At one point, the sweet/sour differential was inside $3 for
sweet," he added.
      Light Louisiana Sweet between sold between $12.20 and
$13.25 a barrel, well below the $13.60 a barrel over West Texas
Intermediate seen Friday.
    Mars sour held its value, trading at Friday's level
of $10.50, weaker by 80 cents.	
    The transatlantic spread widened 66 cents to
$16.79 in favor of Brent, which should have supported stronger
sweet crude premiums.  	
    Traders said planned reversal of Seaway pipeline starting
May 17 to bring the first crude directly from Cushing, Oklahoma,
to the Gulf Coast could be having an effect.	
    Domestic sweet has been discounted sharply from Brent
because it hasn't been able to reach the world market at the
Gulf Coast. When that changes, it's expected to strengthen WTI
and weigh on cash crudes.
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