US Benchmark Oil Price Rises Almost 9%, According to Platts

The price of West Texas Intermediate (WTI) crude, as assessed by Platts, rose $3.25 for June delivery, to $39.59-39.61 per barrel. Platts is the global energy information division of The McGraw-Hill Companies.

This jump does not tell the entire story of a month that saw Platts' WTI assessment hit $41.76-$41.78 per barrel on May 24, the highest since Platts began assessing WTI in 1983. The WTI assessment was in excess of $40 every day from May 11, except for one day when it dipped slightly below that level.

Light Louisiana Sweet crude (LLS), produced onshore in Louisiana and in the shallow waters off the state's coast, rose by $3.38, or more than 9%, to an average of $39.36-$39.40 per barrel. That slightly bigger rise than WTI can be seen as a direct result of the fact that LLS is a gasoline-rich crude and would be expected to outperform WTI, which does not have a gasoline yield as high as that of LLS.

"This is a gasoline-led market and refineries are looking to pump out as much as possible," said John Kingston, director of oil at Platts. "Given that, it is not surprising that traders would have bid up the price of LLS relative to WTI."

All US pipeline grades of crude experienced a similar rise in prices. Wyoming Sweet, the benchmark crude in the Rocky Mountains, rose $3.32, or 9.6%, to $37.78-37.85 per barrel, while Line 63, a key grade in California, rose $3.31 to $37.61-$37.65.

Compared to the WTI rise of $3.25, Alaska North Slope (ANS)—which does not trade on the same pipeline basis as WTI or Line 63—is only running about $3.50 higher between May 1 and May 25 compared to its average for the full month of April 2004.

"With some refining capacity still on the sidelines, it's a bit surprising that ANS and Line 63 would not have risen further," Kingston said. "But the market has more than the usual amount of competing foreign crudes, and that's keeping ANS prices in check."

Platts' monthly averages for WTI and related grades are calculated on the basis of the 26th through the 25th, reflecting actual trading activities for a given month. Monthly trading in US crudes delivered on pipelines closes on the 25th or the business day closest to it. For example, March crude trading ends on February 25, when all shipments on US crude pipelines must be arranged with pipeline operators. By contrast, crude trading on the New York Mercantile Exchange for a particular month closes three business days prior to that scheduling deadline.