Oil firm, Brent's premium to U.S. narrowest since Sept
Amazing what a bit of infrastructure can do. Enbridge reported the first flows from the reversed line back in late May and I kind of forgot about it.
Seaway Pipeline expansion in focus
* Manufacturing in United States, China expanded in December
* Traders eye ECB meeting this week (Adds comment from analyst, paragraphs 4, 5)
Brent crude oil prices were steady above $111 a barrel on Monday while U.S. crude futures edged higher, cutting the spread between the two benchmarks by a penny to its narrowest since September as a U.S. pipeline expansion project neared completion.
The Seaway Pipeline expansion, which will bring more crude oil from the bottlenecked midcontinent market around Cushing, Oklahoma, to premium-priced refiners on the Gulf Coast, is due to be completed by Friday, the companies involved said last week.
The pipeline's expansion to 400,000 barrels per day (bpd) from 150,000 bpd should help reduce the crude oil glut around Cushing - delivery point of the U.S. benchmark futures contract - created by rapid increases in U.S. and Canadian production over the past three years.
"U.S. pipelines and infrastructure will be one of the key areas the market focuses on this year," said Andy Lebow, vice president at Jefferies Bache in New York.
"Traders were expecting the Seaway expansion to start a little later so knowing it could be flowing at a higher rate from this week has helped support U.S. crude relative to Brent."
In London, the Brent crude oil contract reversed early losses to rise 9 cents by the close, finishing at $111.40 a barrel. The February contract traded between a high of $111.67 a barrel and a low of $110.54 a barrel on the day.
The U.S. crude oil future contract for February delivery, which is delivered into storage tanks at Cushing, rose 10 cents to settle $93.19 a barrel.
Its discount to Brent narrowed to the lowest level since September, touching $17.80 a barrel at one stage, before widening back to $18.35 a barrel. In November the spread had briefly widened above $26 a barrel....MORE
Previously:
May 23, 2012
Counting the Barrels of Oil Leaving Cushing (EPD; ENB)
June 18, 2012
Goldman, Oppenheimer Weigh In on the Brent-WTI Spread
By now our smart, funny and good-looking readers have probably figured out that the Keystone XL pipeline would have done much the same thing, get oil to the Gulf Coast refineries to put product on offer to the European markets.
Not exactly a pitch that Trans-Canada could make to the U.S. Federales for XL but true nonetheless.
Enbridge is going to spend almost $9 Billion in an under-the-radar effort to expand, reroute and build new (in the case of the Enbridge Enterprise j.v. Wrangler pipeline out of Cushing)
As the Los Angeles Times reported in August:
...The company aims to build a larger line alongside its pipeline from Flanagan, Ill., to Cushing, Okla.; add a line alongside a newly acquired pipeline that runs from Cushing to the Texas Gulf Coast, a project that it's splitting with another pipeline company; and increase the capacity of a line from northwest Indiana through Michigan. Smaller projects are planned as well....Some smooth operators.
Inside Climate News did a map of the action:
