NEW YORK: Front-month US crude's premium to the second-month rose to the highest in more than three years on data showing a large draw in inventories at the Cushing, Oklahoma delivery point for US crude futures.
US crude futures for February delivery traded as much as 25 cents a barrel over futures for delivery in March, the highest such premium since October 2014.
Data from market intelligence firm Genscape estimated a draw of more than 3.5 million barrels at Cushing in the week to Jan. 9, traders who saw the data said.
A ramp up in flows on a new pipeline from Cushing, Oklahoma to Memphis, Tennessee helped draw down inventories, traders said
The Plains All American Diamond crude oil pipeline can transport up to 200,000 barrels per day (bpd) of domestic sweet crude and was currently seen operating at about 180,000 bpd, traders said
The 590,000-barrel-per-day Keystone crude pipeline is still running at reduced rates, limiting flows into Cushing -traders.
Cushing stocks are likely to stay relatively tight through the first half of 2018 due to pipeline dynamics, Citi said in a note on Wednesday.
In addition, a cold snap that gripped much of the United States dented oil production last week, supporting cash crude grades and propping up the spread.
US production fell 290,000 bpd to 9.5 million bpd in the most recent week.
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