West Texas Intermediate oil in New York fluctuated after operators said the Seaway pipeline won’t be able to carry projected volumes in the “foreseeable future.” The WTI discount to Brent narrowed on changes to North Sea crude pricing.
WTI traded in a 91-cent-a-barrel range. Enterprise Product Partners LP said Seaway isn’t able to move a planned capacity of 400,000 barrels a day. Surging U.S. output has led to the development of rail routes to make up for the Seaway delays. Platts, which publishes world oil price assessments, proposed changes to its North Sea pricing formula less than two weeks after Royal Dutch Shell Plc changed its own trading contract.
“Seaway isn’t going to reach full capacity when people were expecting,” Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $1.4 billion. “Other routes have been developed to make up for the delayed start of the line. When there’s an arbitrage this big, the market is going to find ways to profit from it.”
WTI futures for March delivery, which expire tomorrow, fell 4 cents to $95.82 a barrel at 9:57 a.m. on the New York Mercantile Exchange. The more-active April contract declined 11 cents to $96.30. The volume of all futures traded was 54 percent above the 100-day average.
Floor trading in New York was closed yesterday because of the Presidents’ Day holiday in the U.S. Yesterday’s electronic transactions will be booked with today’s trades for settlement.
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