(Reuters) - Midland crude prices on Friday firmed to the strongest in three weeks as shippers bought crude to fill a newly expanding pipeline that will bring oil from West Texas to a crude terminal in Houston, traders said.
A series of pipeline expansions and new construction have lifted Midland prices, which had tumbled last August on transport constraints to $18 a barrel below the U.S. crude benchmark, the lowest in almost four years.
West Texas Intermediate crude at Midland on Friday traded at a 25-cents a barrel premium to U.S. crude futures, the strongest since mid-February and up from a 35-cent discount earlier this week, according to traders.
West Texas Sour, a different grade, traded at a 50-cent a barrel premium on Thursday, reflecting demand for heavier grades in the U.S. Gulf Coast, where refiners are hunting for heavy crudes to augment supplies from Mexico, Canada and Venezuela, which remain constrained.
Regional prices rose as Enterprise Products Partners LP this month began to fill its Midland-to-ECHO crude pipeline, which is increasing to 620,000 barrels per day (bpd) from 575,000 bpd, according to an investor presentation this week.
The Houston pipeline operator did not immediately respond to a request for comment.
The Midland-to-ECHO pipeline expansion spurred additional crude purchases that lifted the price of Midland crude, traders said. The pipeline runs to Enterprise’s ECHO terminal in Houston, which can store 7.4 million barrels of oil.
Reporting by Collin Eaton in Houston; Editing by Jeffrey Benkoe
Our Standards: The Thomson Reuters Trust Principles.