Mars eases as WTI/Brent spread trades in narrow range

Mars sour crude grades weakened on Wednesday, as the spread between U.S. West Texas Intermediate (WTI) and Brent crude futures traded in a narrow range.

Mars eased 35 cents at a midpoint of a 65-cent premium to WTI. The grade eased for the second straight session after climbing last week on Saudi Arabia's plans to extend production cuts for one more month to include September.

The supply cuts and ensuing price hikes are expected to limit Asia access to crude oil with higher sulfur and turn to countries including the United States for sour grades.

However, WTI/Brent spread (WTCLc1-LCOc1) has traded in a narrow range, limiting the economics of buying U.S. crude and shipping it across the world. The spread last widened 8 cents to minus $3.89.

The narrow spread cut U.S. crude exports last week by 2.9 million barrels per day, the steepest fall on record, according to U.S. Energy Information Administration data.

The drop in exports raised U.S. crude stocks (USOILC=ECI) by 5.9 million barrels in the last week to 445.6 million barrels.

Weakness in U.S. crude exports is likely to continue due to the narrow WTI/Brent spread, said Phil Flynn, an analyst at Price Futures Group.

* Light Louisiana Sweet (WTC-LLS) for September delivery gained 5 cents to a midpoint of a $2.40 premium and was seen bid and offered between a $2.20 and $2.60 a barrel premium to U.S. crude futures CL1! ​

* Mars Sour (WTC-MRS) fell 35 cents to a midpoint of a 65-cent premium and was seen bid and offered between a 50-cent and 80-cent a barrel premium to U.S. crude futures CL1! ​

* WTI Midland (WTC-WTM) was unchanged at 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 CL1! ​

* West Texas Sour (WTC-WTS) fell 5 cents to a midpoint of a 60-cent premium and was seen bid and offered between a 25-cent and 95-cent a barrel premium to U.S. crude futures CL1! ​

* WTI at East Houston (WTC-MEH), also known as MEH, traded between a $1.20 and $1.60 a barrel premium to U.S. crude futures CL1!

* ICE Brent October futures BRN1! rose $1.38 to settle at $87.55 a barrel on Wednesday​.

* WTI September crude CL1! futures rose $1.48 to settle at $84.4 a barrel on Wednesday​.

* The Brent/WTI spread (WTCLc1-LCOc1) widened 8 cents to last trade at minus $3.89, after hitting a high of minus $3.72 and a low of minus $3.91.