U.S. coastal cash crude grades weakened on Tuesday, dealers said, as U.S. crude reached its smallest discount to Brent in more than four years during trading, hurting export demand.
The WTI/Brent spread narrowed 32 cents to trade at a discount of $2.08, the smallest since May 2022, though it widened at the close to a discount of $3.39. A narrower discount, typically smaller than $4, reduces foreign buyers' appetite for U.S. crude.
On the supply side, U.S. crude oil production rose to 13.93 million barrels per day in April, the highest on record, monthly data from the Energy Information Administration showed, as producers ramped up output in response to higher oil prices owing to the Iran war.
U.S. crude oil inventories fell by 6.1 million barrels last week, market sources said, citing data from the American Petroleum Institute.
Light Louisiana Sweet for August delivery rose 20 cents to a midpoint of a $1.25 premium and was seen bid and offered between a $1.00 and $1.50 a barrel premium to U.S. crude futures NYMEX:CL1!.
Mars Sour eased by $1 at a midpoint of a $3 discount and was seen bid and offered between a $3.25 and $2.75 a barrel discount to U.S. crude futures NYMEX:CL1!.
WTI Midland firmed 5 cents to a midpoint of a 5-cent discount and was seen bid and offered between a discount of 30 cents and a 20-cent a barrel premium to U.S. crude futures NYMEX:CL1!.
West Texas Sour firmed 35 cents to a midpoint of a $1.95 discount and was seen bid and offered between a $2.05 and $1.85 a barrel discount to U.S. crude futures NYMEX:CL1!.
WTI at East Houston, also known as MEH, traded between a discount of 10 cents and a 40-cent a barrel premium to U.S. crude futures NYMEX:CL1!.
ICE Brent August futures ICEEUR:BRN1! fell 23 cents to settle at $72.92 a barrel on Tuesday.
WTI August crude NYMEX:CL1! futures fell $1.25 to settle at $69.50 a barrel on Tuesday.
The WTI/Brent spread widened 99 cents to last trade at minus $3.39, after hitting a high of minus $2.08 and a low of minus $3.39.