The Mars cash differential declined $1.15/barrel Thursday on a narrower Brent/WTI spread and low demand for the crude stemming from the reversal of Shell's Houma, Louisiana-to-Houston pipeline system, according to market sources.
The Mars differential was assessed at WTI plus $1.10/b after trading at that level late in the day. WTI plus $1.10/b is the lowest the Gulf Coast benchmark crude has been assessed at since January 3, 2011, when it was WTI plus 75 cents/b.
Mars has dropped $3.55 since June 5 when it was assessed at WTI plus $4.65/b.
The Brent/WTI spread narrowed 61 cents Thursday to $7.13/b as of the Platts 3:15 p.m. EDT assessment.
The low demand for Mars was due to the ongoing reversal of Shell's Houma-to-Houston crude pipeline.
"There's just no interest right now," a Gulf crude source said. "It's difficult to get barrels with the Ho-Ho line undergoing its transition. Getting barrels to refineries is a challenge right now."
The Houma-to-Houston pipeline is undergoing the second phase of its reversal project, where the portion from Port Arthur, Texas, to Clovelly/St. James, Louisiana, will be reversed.
The first phase of the project was completed in January and ships crude from East Houston to the Nederland/Port Arthur area in Texas.
