NEW YORK: Cash crude differentials in the United States were mostly weaker on Thursday as the trans-Atlantic spread between Brent and US crude futures narrowed, according to traders and brokers.
Brent's premium to US crude ended at $8.85 a barrel based on July contract settlements, after ending at $9.30 on Wednesday. The spread has narrowed from $9.93 on Tuesday.
The spread traded from $8.50 to $9.27 on Thursday, after widening to $10.01 intraday on Wednesday and $10.06 on Tuesday.
Usually, the wider the arbitrage, the more supportive for US cash crude differentials, while a narrower spread often pressures differentials. This holds especially true for sweet grades that are priced in line with global waterborne crudes such as Brent.
The Brent-US crude spread narrowed on Thursday after Genscape reported that oil inventories at the Cushing, Oklahoma, delivery hub fell by more than a million barrels between May 31 and June 4.
The Cushing hub is the delivery point for West Texas Intermediate (WTI), the US light, sweet crude contract's benchmark grade.
Crude oil futures rose on Thursday on news that Britain's largest North Sea oilfield was shut down for the second time in less than a week and BP Plc announcing it expects a upgraded crude distillation unit at its Whiting, Indiana, refinery to start up by the end of June.
Differentials for grades produced in Midland, Texas, strengthened on support from the expectation that the start up of the Whiting crude unit will increase use of crude oil from the Cushing hub.-Reuters
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