Marathon Petroleum expects WTI-Brent crude spread to widen

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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By: Anna Matherne

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