U.S. cash crudes surge

Differentials for cash grades surged in the U.S. domestic crude market yesterday as the October/November spread remained under pressure, traders said. The front month WTI October/November spread was at 11 cents discount by midday Wednesday or at contango - when succeeding contract months are pricier.

WTI posting plus was talked at $3.08/3.13 by midday from $3.06/3.10 the previous day.

Main domestic sweet Light Louisiana Sweet/St. James traded 20 cents higher at 21, 23 and 25 cents premium to U.S. domestic benchmark WTI/ Cushing from three cents discount on Wednesday.

Heavy Louisiana Sweet/ Empire traded at parity to the benchmark from WTI/Cushing minus 40/35 cents late Tuesday.

West Texas Sour/Midland dropped a nickel to talk at $2.20/2.10 under the benchmark from $2.25/2.15 discount yesterday.

Meanwhile, Nymex crude oil futures fell further yesterday afternoon as front-month gasoline took a big hit after the bullish effects of a large stock draw waned.

October crude dropped to a session low of $26.77 a barrel, accumulating a loss of 40 cents. In early trade it peaked at $27.60, up 43 cents. At 2:08 p.m. EDT (1808 GMT), it fought back to $26.90, down 27 cents.

September gasoline, which expires Friday, slumped 3.06 cents to 81.45 cents a gallon, later cutting losses at 82.50 cents, down 2.01 cents. Near the opening it touched 86.00 cents, the highest since June 18.

October gasoline traded 0.40 cent lower at 78.45 cents a gallon, climbing back from a session nadir of 77.90 cents.

September heating oil continued to drift lower, hitting 75.90 cents a gallon, down 1.58 cents. October heating oil weakened further to 76.50 cents a gallon, down 1.65 cents.

In London, IPE Brent crude futures traded softer yesterday, driven off a seven-week high by profit-taking following U.S. government data confirming an earlier report of deflated gasoline inventories.

By 1647 GMT October Brent was down 18 cents at $26.29 a barrel, the day's low. The market had touched a seven-week peak of $26.79 a barrel at midday, but profit- taking cut those gains as the market remained mostly range-bound.

IPE September gas oil also gave up earlier gains to close just $1 higher at $234.50 a tonne.