UPDATE 2-Marathon Petroleum expects narrowed WTI-Brent spread to widen

Tue Apr 30, 2013 4:19pm EDT
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* Rebound in European demand, increased US production to widen spread

* Weak European demand in Q1 contributed to lower diesel exports

* Marathon expects to run cheap US crude at Galveston Bay refinery

By Kristen Hays

HOUSTON, April 30 (Reuters) - Marathon Petroleum Corp expects the narrowed spread between U.S. crude benchmark West Texas Intermediate and London's Brent crude to widen again, though not necessarily to the $20-plus level seen earlier this year, company executives said on Tuesday.

That spread, which surpassed $20 in February but has dropped below $10, has been a boon for refiners like Marathon with multiple plants in the U.S. Midwest that are in close proximity to cheaper U.S. inland and Canadian heavy crudes output.

On Tuesday, the spread between Brent and U.S. crude settled at less than $9 for the first time since December of 2011, and down from over $23 in February 2013. The spread moved between $10 and $13 for most of April.

Gary Heminger, chief executive of Marathon Petroleum, told Reuters in an interview that Europe's weak economy and a heavy refinery turnaround season depressed demand, pushing down Brent prices.

As those turnarounds wrap up, demand for Brent is expected to rise, pushing prices up relative to WTI, he said.   Continued...