U.S. Cash Crude-Inland grades dip as maintenance season warms up

NEW YORK, Jan 21 (Reuters) - U.S. inland crude differentialsfell sharply on Tuesday as refinery maintenance ramped up in theregion and weighed on demand for oil.

West Texas Intermediate crude at Midland fell about$2 a barrel to trade as low as $4-a-barrel discount to thefront-month U.S. crude oil futures contract.

West Texas Sour fell $1.25 a barrel to a bid of $3.25a barrel under futures and offers at $2.50 under futures,traders said.

Western Refining Inc on Monday said it isundertaking a planned turnaround on the south side of its122,000-barrel-per-day El Paso, Texas, refinery.

Other refiners like Valero and Marathon havealso taken units offline for planned work. Industry estimatesshow a total of 1.6 million barrels-per-day capacity could beoffline for maintenance in the first quarter.

Coastal cash crude grades, however, shrugged off the demandoutlook and rallied on Tuesday to regain some ground they lostlate last week.

Mars sour traded at a $9.75 a barrel premium to thefutures contract, up from the $5.70 a barrel over futuresrecorded late on Friday.

Light Louisiana Sweet rose about $1.25 a barrel to$11.25 a barrel over benchmark futures.

One trader said the market is eyeing planned work on RoyalDutch Shell's offshore Amberjack system, which carriesMars and other sour grades to Louisiana.

Shell declined to comment on the pipeline's operations.

The company restarted another line on its Ship Shoal systemthat carries sour crude to the Gibson terminal in Louisiana onFriday following repairs.

In the futures market, U.S. crude oil rose 62 cents toexpire at $94.99 a barrel. International Brent rose 38cents to $106.73 a barrel.

The spread between the two contracts ended at$11.76 a barrel. (Reporting by Selam Gebrekidan; Editing by Jonathan Oatis)