17 May 2012 21:50 [Source: ICIS news]
CHICAGO (ICIS)--The US Seaway oil pipeline reversal will not have an immediate impact on crude oil prices, and hence distillates, until its capacity increases, an economist said on Thursday.
The Seaway pipeline reversal, which was completed Thursday, will transport 150,000 bbl/day of crude from the storage hub in Cushing, Oklahoma, to the US Gulf coast. The first flows of crude are expected this weekend.
The reversal is expected to reduce the price gap between West Texas Intermediate (WTI) crude and pricier crude grades used on the Gulf coast and east coast.
By mid-day, WTI was trading at $92.95/bbl compared with $108.33/bbl for Brent, a difference of $15.38/bbl. The difference had exceeded $20/bbl in September.
According to Roberto Siebel, chief economist with Hess Energy Trading, marginal costs will not be instantly affected by the reversal because there are still large volumes of crude being transported by both train and barge.
“In order to get prices down, the majority has to go through it,” he said, while speaking at the International Air Transport Association’s (IATA) Aviation Fuel Forum.
US-based mid-stream company Enterprise Products and Enbridge said the capacity should rise to more than 400,000 bbl/day in the first quarter of 2013.
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