(Reuters) - West Texas Intermediate at Midland’s discount to U.S. crude futures on Friday narrowed to a four-month low as traders focused on the start of a new pipeline expansion in the Permian Basin, dealers said.
WTI Midland traded at a $6 per barrel discount to U.S. crude on Friday, the lowest since June 22. The gap widened to as much as $9 per barrel this week.
A crude oil bottleneck in the biggest U.S. oil field has depressed Midland prices for months. As crude production surged, oil companies struggled to find available pipeline capacity to carry their crude to market, with little relief until new pipelines come online over the next two years.
But WTI Midland has strengthened since it reached a six-year low in late August, at an $18.25 per barrel discount to U.S. crude. Its strengthening on Friday came as traders focused on a coming pipeline expansion.
Plains All American Pipeline LP’s expanded Sunrise pipeline is scheduled to begin operations in early November, adding 500,000 barrels per day (bpd) of takeaway capacity from Midland to Wichita Falls, Texas, with connections to the U.S. crude storage hub in Cushing, Oklahoma.
Reporting by Collin Eaton; Editing by Steve Orlofsky