CORRECTED-UPDATE 2-MPLX to restart Ozark crude pipeline on Thursday after outage -traders

By Devika Krishna Kumar
Updated

(Corrects headline and lead paragraph to say Thursday not Friday)

By Devika Krishna Kumar

NEW YORK, May 29 (Reuters) - MPLX LP said on Wednesday that it would restart early on Thursday its 360,000 barrel-per-day (bpd) Ozark crude pipeline from Cushing, Oklahoma to Wood River, Illinois, traders told Reuters, citing a shipper notice.

MPLX did not elaborate on the cause of the shutdown in the shipper notice but traders have said the disruption was likely due to flooding in the region.

The company expects the pipeline to operate at full capacity upon restart, according to the notice.

U.S. futures and cash crude markets at Cushing, the delivery point for U.S. crude futures, pared losses on the projected restart after weakening significantly on Tuesday due to the outage.

The June/July U.S. West Texas Intermediate crude cash roll strengthened to trade as strong as minus 15 cents per barrel on Wednesday from about minus 50 cents a barrel earlier in the day, dealers said. The cash roll is the three-day period after the front-month futures contract expires, when traders rebalance their positions.

News of the restart also strengthened the front-month futures spread between July and August U.S. crude futures <WTCLc1-WTCLc2> from the weakest levels in nearly three months and helped U.S. crude futures pare losses, traders and brokers said.

Trading in the cash roll and the front-month spread is closely tied to supply and demand at Cushing.

Representatives of MPLX did not respond to requests for comment.

More than a week of violent weather, including downpours and deadly tornadoes, has devastated the central United States, bringing record-breaking floods in parts of Oklahoma and Arkansas, turning highways into lakes and submerging all but the roofs of some homes.

More rain is forecast, and the flooding is expected to spread, according to the National Weather Service (NWS) and local officials.

Late on Tuesday, Tallgrass Energy LP said it halted all deliveries to Pony Express Pipeline destinations due to the extreme weather and flooding in central Oklahoma.

Tallgrass last week shut down the pipeline's south end segment, which runs from Sterling, Colorado through to Cushing, Oklahoma due to the extensive flooding on the Cimarron River.

Meanwhile, refinery operations at the HollyFrontier Corp Tulsa, Oklahoma refinery were temporarily shut down on May 22 and will remain shut until the risk of flooding has diminished, the company said in a statement on Wednesday. (Reporting by Devika Krishna Kumar in New York; editing by Marguerita Choy, Lisa Shumaker and Dan Grebler)