Physically traded domestic crude grades fell on Friday, dealers said, as domestic demand is set to fall and the WTI/Brent spread narrowed for the fourth straight day.

U.S. oil refiners are expected to have about 245,000 barrels per day of capacity offline in the week ending July 18, decreasing available refining capacity by 50,000 bpd, research company IIR Energy said.

Offline capacity is expected to fall to 171,000 bpd in the week ending July 25, and remain at that level in the subsequent week, IIR added.

Meanwhile, U.S. crude futures’ discount to Brent narrowed to as little as $3.18 a barrel on Friday. A narrower spread makes U.S. grades less attractive to foreign buyers.

Minus $4 per barrel is typically considered the level that encourages U.S. exports, as traders see an open arbitrage route.

* Light Louisiana Sweet (WTC-LLS) for August delivery fell 43 cents to a midpoint of a $2.50 premium and was seen bid and offered between a $2.40 and $2.60 a barrel premium to U.S. crude futures

* Mars Sour (WTC-MRS) fell 25 cents to a midpoint of a $1 discount and was seen bid and offered between a $1.10 and 90-cent a barrel discount to U.S. crude futures

* WTI Midland (WTC-WTM) fell 10 cents to a midpoint of a 25-cent premium and was seen bid and offered between a 15-cent and 35-cent a barrel premium to U.S. crude futures

* West Texas Sour (WTC-WTS) fell 10 cents to a midpoint of a 50-cent discount and was seen bid and offered between a 75-cent and 25-cent a barrel discount to U.S. crude futures

* WTI at East Houston (WTC-MEH), also known as MEH, traded between a 40-cent and 60-cent a barrel premium to U.S. crude futures

* ICE Brent September futures fell 24 cents to settle at $69.28 a barrel

* WTI August crude futures fell 20 cents to settle at $67.34 a barrel

* The Brent/WTI spread (WTCLc1-LCOc1) narrowed 10 cents to last trade at minus $3.19, after hitting a high of minus $3.18 and a low of minus $3.30
Source: Reuters