“With Bakken pricing above WTI, we would expect less Bakken crude to flow south into Cushing, which should help to keep Cushing inventories from building too much as BP’s Whiting refinery undergoes conversion for more heavy oil refining. Net, we expect the WTI-Brent spread to remain volatile in 2012, but to narrow to -$4/bbl in early 2013 as the Seaway pipeline reaches its full capacity.” the Team adds.
As the US Gulf Coast becomes saturated with light-sweet crude in 2H13, however, “we expect LLS will need to trade at a $2.00/bbl discount to Brent in order to direct increasing amounts of Bakken crude by rail to the US East Coast instead of to the US Gulf Coast. This will likely cause WTI-Brent to widen to -$6/bbl by the end of 2013.” they warn.
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