Afternoon Market Overview

Oil prices increased on Friday with the complex ending the week modestly higher after three third weekly price declines in the last nine weeks. Oil prices increased across the board for the week.

Last week both WTI crude oil and the spot Brent contract were higher with the April WTI contract increasing more than April Brent even after a larger than expected build in US crude oil stocks. The April Brent/WTI spread narrowed last week but with Brent still trading at a premium to WTI. The April 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 March WTI contract increased on the week and is in the middle of the linear regression trend channel. The April Brent contract increased less than the April WTI contract resulting in the April Brent/WTI contract narrowing by $0.51/bbl or 13.42 percent to $3.29/bbl by the end of the week. The April Brent/WTI spread remained in its current technical trading range last week. The March WTI contract increased $2.48/bbl or 4.19 percent as total US crude oil stocks increased more than the market expectations. The spot April Brent contract increased by 3.26 percent or $2.05/bbl. The HO and RBOB crack spreads both depreciated versus WTI for the week even as refined product inventories decreased with refinery run rates also decreasing. The widely followed 3-2-1 crack spread narrowed last week driven by the RBOB component.

On the distillate fuel front the March Nymex HO contract increased for the week by 2.98 percent or $0.0553/gal after a small draw in distillate fuel stocks. Gasoline prices increased after gasoline inventories increased on the week. The March Nymex gasoline price increased by 2.98 percent or $0.0507/gal this past week.