On the heels of several US Gulf Coast refineries coming back online after planned turnarounds, Light Houston Sweet jumped up $1.25/b week on week to be assessed at front-month WTI cash plus $2.15/b on Thursday.
LHS, which represents WTI Midland crude at Houston terminals, also received upward support from the March swap spread between WTI and Brent, which widened 10 cents/b week on week to $1.35/b on Thursday. Both the NYMEX and Brent contracts were assessed higher week on week, with the front-month NYMEX contract recovering from hitting its lowest level since May 2003 on February 11.
The oil complex received a boost during the week from talks amid Saudi Arabia, Qatar, Russia, and Venezuela of freezing crude oil output at January levels, with Iran giving a favorable opinion of the freeze.
The LHS differential also was buoyed slightly by a draw in Gulf Coast crude stocks of 383,000 barrels week on week to 251.211 million barrels, according to the US Energy Information Administration's weekly crude storage report. Meanwhile, crude stocks at Cushing, Oklahoma, the delivery point for the front-month NYMEX contract, increased 36,000 barrels week on week to 64.733 million b/d, pushing working capacity of storage there to 89%. Regional crude imports also continued to climb, rising 398,000 b/d week on week to 2.897 million b/d.
The strengthening of the LHS differential coincided with WTI Midland increasing 43 cents/b week on week to an assessment of WTI plus 68 cents/b Thursday.
With LHS playing catchup to the Light Louisiana Sweet differential in recent weeks, for the second week in a row it maintained a 60 cent/b discount to LLS, with LLS assessed at WTI cash plus $2.75/b on Thursday.
LHS began the week by rising 45 cents/b Friday on the back of strengthening refining margins in the US Gulf Coast. Market activity was halted Monday in observance of the Presidents Day holiday in the US. On Tuesday, LHS fell 15 cents/b, before rising 30 cents/b Wednesday and 65 cents/b Thursday to its current assessment of WTI cash plus $2.15/b.
Platts launched its WTI Midland FOB Houston assessment February 8, with the WTI FOB Houston spread to LHS assessed at plus 65 cents/b Thursday, versus 75 cents/b a week ago. Thursday's assessment puts WTI FOB Houston at a $2.80/b premium to the April WTI CMA.
