NEW YORK, Sept 26 (Reuters) - U.S. crude prices in Midland, Texas, climbed to the highest since February this week as testing on the Gray Oak pipeline got underway and crude flows began on the Permian Express 4 pipeline, market sources familiar with the matter said on Thursday.
New pipelines from the Permian basin this year have helped alleviate a bottleneck that trapped barrels in the largest U.S. shale basin and depressed prices for over a year.
Phillips 66’s 900,000 barrel-per-day pipeline that runs from the Permian and the Eagle Ford to Texas Gulf Coast destinations is one of the largest among the new pipelines from the Permian basin. The line is set to begin commercial deliveries in the fourth quarter of this year.
Hydrotesting on the line began this week and linefill is expected to ramp up in October, three sources said.
Meanwhile, crude flows on Energy Transfer LP’s Permian Express 4 has also started, market sources said.
The Permian Express 4 line provides incremental Permian takeaway capacity, with a total capacity of 120,000 bpd.
An Energy Transfer spokeswoman did not immediately respond to a request for comment.
October Midland crude prices this week climbed to trade as high as 75 cents a barrel above benchmark futures, the highest level since February. November trading, which began Thursday, was thin and Midland crude was seen bid and offered between 70 and 90 cents a barrel premium, dealers said. (Reporting by Devika Krishna Kumar and Laila Kearney in New York and Collin Eaton in Houston; Editing by Tom Brown)