Afternoon Market Overview

Oil prices decreased on Friday with the complex ending the week modestly after four weekly gains in a row. Oil prices decreased across the board for the week. Last week both WTI crude oil and the spot Brent contract were lower with the Mar WTI contract decreasing less than Mar Brent after another strong draw in US crude oil stocks.

The March Brent/WTI spread narrowed modestly last week but with Brent still trading at a premium to WTI. The March Brent premium to WTI remains wide enough to keep the arb window open for select US crudes to work into the export market. The spot February WTI contract decreased on the week and is now closer to the lower boundary support level of its current technical trading range. The March WTI contract traded mostly in sync with the February contract. The March Brent contract decreased more than the March WTI contract resulting in the March Brent/WTI contract narrowing by $0.34/bbl to $5.30/bbl by the end of the week. The March Brent/WTI spread remained in its current technical trading range last week.

The HO and RBOB crack spreads were mixed versus WTI for the week as crude oil stocks declined strongly in the US last week while refined product inventories were mixed on decreased refinery run rates.

The ULSD contract depreciated versus WTI while the RBOB contract appreciated on the week. The widely followed 3-2-1 crack spread widened last week driven by the RBOB component. The February WTI contract decreased $0.93/bbl or 1.45 percent as total US crude oil stocks decreased more than the market expectations. The spot March Brent contract decreased by 1.8 percent or $1.26/bbl. On the distillate fuel front the February Nymex HO contract decreased for the week by 1.28 percent or $0.0266/gal even after a larger than expected draw in distillate fuel stocks.

Gasoline prices increased even after gasoline inventories increased strongly on the week. The February Nymex gasoline price increased by 0.76 percent or $0.0141/gal this past week.