BUY OR SELL: Should heavy crude cost as much as light?

NEW YORK (Reuters) – Heavy, sour crude has rallied against light, sweet crude in recent months, bringing grades like Mexico’s Maya and U.S. Mars sour into close range with light-sweet crudes, such as West Texas Intermediate.

…Light/sweet crude normally fetches large premiums since it is easier to refine into prized light fuel. But high inventories of light crude and fuels, along with OPEC supply cuts, have helped boost heavy grades.

Higher heavy prices are bad news for refiners like Valero (VLO.N) that invested billions to process more sludgy crude. Many heavy crude producers, as well as traders who stockpile crude or arbitrage spreads, profit from the unusual spreads.

… Heavy crude may rally in coming months, and big discounts for heavy crude may never return, some experts say.

Reuters