Fed stays dovish but oil falls anyway; WTI ends under $104
Global oil prices slipped on Wednesday, with losses in U.S. crude widening the trans-Atlantic spread for a second day, amid signs that Libyan exports might resume and indications that oil was flowing into the depleted Cushing storage hub.
The spread between Brent and West Texas Intermediate (WTI), the U.S. benchmark delivered at Cushing, Oklahoma, reached more than $6 a barrel, the widest since June. It has expanded by more than $3 since Tuesday, the biggest two-day move since early February, as traders bet that tightening Midwest supply conditions were easing.
Government data on Wednesday showed Cushing oil inventories were the lowest since March 2012, a 25 percent drop in seven weeks. But traders instead focused on news that an oil-by-rail pipeline was pumping oil back into local storage tanks for the first time in a year.
Industry intelligence group Genscape reported that the 90,000 barrel-per-day Hawthorn pipeline, which carries oil from a terminal in Stroud, Oklahoma, to Cushing, was preparing to restart for the first time since August 2012.
Losses briefly deepened after the minutes of the Federal Reserve's late July meeting showed that it was considering new measures to drain cash from the banking system when it decides to shift away from its current ultra-loose monetary policy.
The Brent/WTI spread also vacillated on Tuesday, when Genscape reported that the Seaway pipeline that carries crude oil from Cushing to the Texas coast had shut. Operator Enterprise Products Partners L.P. said the line was "operating normally" by Wednesday morning.
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