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Light Houston Sweet Analysis


A Platts.com News and Data Feature


LHS differential slips on lower WTI Midland differential


By David Arno


April 10, 2015 - A lower differential for West Texas Intermediate in Midland, Texas, weighed on the market for light sweet crude in Houston, as the differential for Light Houston Sweet declined week on week.


The LHS differential to WTI Cushing was assessed 10 cents/b lower April 9 at plus $4.15/b, or $54.99/b.


Infographic: Light Houston Sweet


LHS was assessed April 2 at WTI plus $4.35/b, or $53.84/b.


The LHS differential maintained its value relative to WTI Cushing through much of the week despite the differentials for WTI Midland and Light Louisiana Sweet slipping, as healthy demand supported it. Eventually the lower values weighed on LHS and caused it to decline.


After being assessed at WTI plus $4.35/b on April 7, the LHS differential dropped 10 cents/b each on April 8 and April 9, as the WTI Midland differential fell.


The differential for WTI Midland was assessed at WTI plus 15 cents/b last April 2, but fell steadily to WTI minus 10 cents/b on April 7 and then WTI minus 35 cents/b on April 9.


The LHS differential relatively held its value throughout the last week despite the LLS differential trading lower through April 8. The LLS differential was assessed at WTI plus $6/b, but declined to WTI plus $5.75/b as the NYMEX crude/ICE Brent spread narrowed, which typically indicates that US crude differentials should increase in order for WTI-based crudes to keep pace with Brent-based crudes.


The spread between the international benchmarks went from $6.04/b on April 6 to $5.12/b on April 8. The WTI/Brent spread widened on April 9 to $6/b, lifting the LLS differential to an assessment of WTI plus $6/b.


Although the LHS differential decreased since last week, the outright price is higher due to a stronger underlying NYMEX crude contract.


The NYMEX May crude futures contract was assessed by Platts at 3:15 pm EDT April 9 at $50.84/b, while the May contract was $49.48/b on March 26.


WTI Midland specifications at the East Houston terminal apply to the Platts LHS assessment methodology. The LHS assessment methodology reflects barrels of WTI Midland marketed from Magellan Midstream Partners' 275,000 b/d Longhorn Pipeline and the 300,000 b/d BridgeTex Pipeline.


Next: LHS differential increases on higher demand



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