HOUSTON, Jan 13 (Reuters) - Inter-month spreads for benchmark U.S. crude futures strengthened on Wednesday as traders weighed a smaller-than-expected build in U.S. oil inventories and the expected start up of a new crude pipeline in the Midwest:
* Discount for February West Texas Intermediate futures to the March contract CLc1-CLc2 squeezed to as much as 84 cents a barrel on Wednesday, up 24 cents from Tuesday’s settlement
* Traders cite smaller than expected builds in U.S. crude stocks. Stocks at Cushing, Oklahoma rose by 100,000 barrels; nationwide inventories rose by 200,000 barrels last week
* Traders speculated that a new Enbridge oil pipeline in Illinois may also be siphoning barrels away from Cushing
* The 300,000 barrel-per-day Southern Access Extension (SAX) pipeline will transport crude from Flanagan, Illinois, which also pumps crude to Cushing, to Patoka, Illinois. Line fill began in November and it was due to start service by end-2015.
* A spokesman for Enbridge did not confirm whether operations had started on the line, but said the company would provide an update within the next two weeks
* Traders noted an uptick in flows out of the Flanagan terminal, which may be an indication that operations on the new line are underway (Reporting by Liz Hampton)