Weak refinery, export demand weakens prices for Midland crude along Texas coast

Arathy Somasekhar

Thu, Mar 6, 2025, 6:12 AM 3 min read

By Arathy Somasekhar

HOUSTON (Reuters) - The terms dispersed betwixt WTI Midland crude successful West Texas and Houston has narrowed this twelvemonth arsenic acold upwind wounded Permian production, driving up prices, but weaker refinery and export request connected the U.S. Gulf Coast pressured that marketplace lower.

The dispersed betwixt the 2 pricing points narrowed to 23 cents successful March, the lowest since November 2023. That compared to an mean of 50 cents a tube a twelvemonth ago, erstwhile grounds crude accumulation astatine the apical U.S. Permian oilfield and beardown export request for WTI Midland crude widened terms differentials.

WTI Midland crude traded astatine a $1.08 premium to U.S. crude futures successful March, easing from a 11-month precocious of $1.22 successful the erstwhile month, information from pricing bureau Argus showed.

The leap successful prices successful February came arsenic 1.8 cardinal barrels successful the Permian were chopped by the caller acold upwind that deed operations, according to estimates from analysts astatine consultancy Energy Aspects.

Meanwhile, Permian-quality crude astatine the Magellan East Houston (MEH) terminal, the main terms appraisal constituent on the Gulf Coast, traded astatine a $1.31 premium to U.S. crude futures. That compared to a $1.47 premium past year.

A 10% tariff by the U.S. authorities connected Canadian crude besides pressured the dispersed arsenic Midwest refiners were seeking WTI-Midland crude to Cushing to regenerate Canadian airy saccharine oil, said Energy Aspects expert Jeremy Irwin.

Permian to Cushing pipeline flows are tracking 100,000 barrels per time higher year-over-year for the archetypal quarter, Irwin said. Cushing inventories person been adjacent operational lows successful caller months, but climbed to astir 25.7 cardinal barrels past week, its highest level successful 4 months.

Energy Aspects said it has accrued its expectations for flows connected the BP 1 pipeline, which runs from Cushing to BP Plc's Whiting refinery successful Illinois and the Ozark pipeline, which connects Cushing to refineries successful Wood River, Illinois, arsenic inland refiners to propulsion much WTI Midland barrels fixed tariffs.

WEAK DEMAND ALONG THE COAST

Four-week mean U.S. refinery utilization stood astatine 85.6% successful the week to February 26, information from the U.S. Energy Information Administration showed, arsenic substance producers acquisition attraction up of summertime driving season.

Net input of crude lipid to refiners connected mean implicit 4 weeks to the past week was 15.5 million, 4.2% little than mean 2024 levels. Also capping request was the last shutdown of LyondellBasell Industries' 263,776 barrel-per-day (bpd) Houston refinery this month.

U.S. crude export volumes besides eased 9,000 bpd to 3.88 cardinal bpd successful February, arsenic outpouring refinery attraction successful Europe chopped flows, and arsenic China implemented a 10% retaliatory tariff connected U.S. oil. China accounted for astir 5% of U.S. crude exports successful 2024.