30 April 2013 23:52 [Source: ICIS news]
HOUSTON (ICIS)--The recent narrow spread between US and European benchmark crudes should widen some, but not reach levels in the $20/bbl, Marathon Petroleum executives said on Tuesday.
The US benchmark West Texas Intermediate (WTI) crude and the European benchmark Brent crude spread has dropped below $10/bbl from low-$20s/bbl in early February.
The higher Brent prices were attributed to a heavy European turnaround season, while US inventories at the Cushing, Oklahoma, hub have not diminished, according to C. Michael Palmer, Marathon’s senior vice president of Supply Distribution & Planning.
But some pipeline activity this year, which will enable crude from the Permian Basin into Houston, should lessen the inventories at Cushing.
This could lead to higher WTI/Brent spreads.
“I don't think, personally, that it's going to reach the kind of levels that we saw before in the $20 level. But to have that [arbitrage] trade between $10 and $15 would certainly not be a surprise,” said Palmer.
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