The expansion of oil production in the US is narrowing the spread between the world’s two most important benchmarks—West Texas Intermediate Crude and Europe’s Brent Crude—to $18.21, the narrowest in over three months.
The spread has narrowed ever since the announcement that the Seaway Pipeline will see 400,000 barrels of oil per day--double its normal production--begin to flow through by January 11.
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Historically, the two benchmarks trade closely together but US oil values have declined since 2010 in comparison with its overseas counterpart.
Estimates of US crude use amid signs of a European economic recovery have boosted prices to the highest levels in four months.
Stockpiles are expected to have gained 1.4 million barrels after losing 11.1 million barrels during the week ended December 28.
The higher capacity of the Seaway Pipeline, a joint venture between Enterprise Products Partners LP and Enbridge Inc., may reduce a glut in the Midwest and reduce imports to the Gulf Coast, the location of about half of the nation’s refineries.
The American Petroleum Institute (API) will release its latest inventory report
—a voluntary survey of refinery operators, bulk terminals, and pipelines—on Tuesday, January 8.