The Light Houston Sweet differential dropped 20 cents/b week-on-week as demand for light sweet crudes on the US Gulf Coast waned, causing the region's crude differentials to weaken.
LHS was assessed Thursday $1.85/b below the Light Louisiana Sweet differential, or $94.02/barrel, and 90 cents/b above WTI.
With the LHS differential narrower on the week, while the LLS differential declined by 85 cents/b in that same time, the outright price fell 91 cents/b as the NYMEX crude contract strengthened.
The October NYMEX crude contract increased by 14 cents/b to $93.12/b Thursday from $92.98/b September 11.
The LHS differential weakened steadily from the end of last week and into this week, but on Wednesday the differential dropped 10 cents/b.
October domestic sweet blend, the WTI lookalike that is blended in Cushing, Oklahoma, and sent to Houston, was heard offered on Wednesday at the East Houston terminal at WTI plus $1.10/b.
Domestic sweet blend carries a quality discount to unblended WTI from West Texas, as it has a different distillation yield due it being the product of blended light sweet shale crude and heavy sour crude in order to meet WTI specifications. Contributing to its discount is that it travels down the 400,000 b/d Cushing-to-Houston Enbridge/Enterprise Seaway crude line that also ships heavy Canadian crude with higher levels of sulfur and metals, which the domestic sweet blend picks up in transit.
The domestic sweet blend was heard to be carrying a 10 cents/b discount to unblended WTI in East Houston, which led to it being assessed on Wednesday at WTI plus $1.15/b.
The lower levels for light sweet crude in Houston has been attributed to recent government data showing high crude imports and low demand as of regional refiners conduct seasonal maintenance, US crude sources said.
Data released by the US Energy Information Administration on Wednesday showed total US imports rose 493,000 b/d to 8.11 million b/d for the week that ended September 12.
The EIA data also showed that refinery utilization rates in the US Gulf Coast fell 1.6 percentage points to 93.4%, as crude runs decreased 23,000 b/d to 8.47 million b/d.
"Huge imports into the US discourage these prices," a crude source said.
WTI Midland specifications at the East Houston terminal apply to the Platts LHS assessment methodology. The LHS assessment methodology reflects barrels of WTI Midland marketed from Magellan Midstream Partners' 275,000 b/d Longhorn Pipeline and the 300,000 b/d Magellan/Occidental BridgeTex pipeline at the East Houston terminal.
