HOUSTON – The price spread between WTI Midland crude in West Texas and Houston has narrowed this year due to cold weather impacting Permian production, which drove up prices. However, weaker refinery and export demand on the U.S. Gulf Coast has pressured the market lower. The spread between the two pricing points narrowed to 23 cents in March, the lowest since November 2023, compared to an average of 50 cents a barrel a year ago. WTI Midland crude traded at a $1.08 premium to U.S. crude futures in March, down from a 11-month high of $1.22 in the previous month. The jump in prices in February was due to 1.8 million barrels in the Permian being cut by recent cold weather. Meanwhile, Permian-quality crude at the Magellan East Houston (MEH) terminal traded at a $1.31 premium to U.S. crude futures, compared to a $1.47 premium last year. A 10% tariff by the U.S. government on Canadian crude also pressured the spread as Midwest refiners sought WTI-Midland crude to replace Canadian light sweet oil. Cushing inventories climbed to about 25.7 million barrels last week, the highest level in four months. Energy Aspects increased its expectations for flows on the BP 1 pipeline and the Ozark pipeline as inland refiners pulled more WTI Midland barrels due to tariffs. Four-week average U.S. refinery utilization stood at 85.6% in the week to February 26, as fuel producers underwent maintenance ahead of the summer driving season. Net input of crude oil to refiners was 15.5 million, 4.2% lower than average 2024 levels. The final shutdown of LyondellBasell Industries’ 263,776 barrel-per-day (bpd) Houston refinery this month also capped demand. U.S. crude export volumes eased 9,000 bpd to 3.88 million bpd in February due to spring refinery maintenance in Europe and China’s 10% retaliatory tariff on U.S. oil. America’s excess light-sweet supply is struggling to attract international interest, pressuring MEH to soften to attract international buyers. The narrow price differential between WTI Midland and MEH is expected to be temporary as refinery maintenance season resolves through spring, and due to strong Permian production growth and increased use of available pipeline capacity.