Afternoon Market Overview

Oil prices increased strongly on Friday with the complex ending the week modestly higher after increasing in value the previous week. Oil prices increased across the board for the week. Last week both WTI crude oil and the spot Brent contract were higher with the May WTI contract increasing less than May Brent after a larger than expected build in US crude oil stocks and a small build in Cushing stocks.

The May Brent/WTI spread widened last week with Brent trading at a modest premium to WTI. The May 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 April WTI contract increased on the week and remains in the downward sloping linear regression trend channel. The May WTI contract traded in sync with the April contract. The May Brent contract increased more than the May WTI contract resulting in the May Brent/WTI spread widening by $0.23/bbl or 6.64 percent to $3.80/bbl by the end of the week. The May Brent/WTI spread remained in its current technical trading range last week.

The April WTI contract increased $0.30/bbl or 0.48 percent as total US crude oil stocks increased more than the market expectations. The spot May Brent contract increased by 1.1 percent or $0.72/bbl. The HO and RBOB crack spreads both appreciated versus WTI for the week as refined product inventories were strongly lower even with refinery run rates increasing.

The widely followed 3-2-1 crack spread widened last week driven by the RBOB component.

On the distillate fuel front the April Nymex HO contract increased for the week by 1.34 percent or $0.0252/gal after a larger than expected draw in distillate fuel stocks. Gasoline prices increased after gasoline inventories decreased on the week. The April Nymex gasoline price increased by 2.18 percent or $0.0416/gal this past week.

Nat Gas prices decreased after increasing during the previous week. The decrease in Nat Gas prices was primarily driven a changing market sentiment as spring rolls in this week. The spot April Nymex contract ended the trading week decreasing by 1.61 percent or $0.044/mmbtu.

On the financial front global equity markets were mixed on Friday but lower for the week. The EMI Index decreased after increasing for the previous week. The EMI Index was lower by 0.40 percent for the week with the year to date gain at 3.6 percent. Three of the ten bourses in the Index are still in positive territory for 2018 with London holding the worst performing spot in the Index with Brazil in the top spot with a 11.1 percent gain for the year. The lower value direction in global equity markets last week was a negative price driver for the oil complex.

On the currency front the US dollar Index traded slightly higher for the week with the Yen/USD and the Euro/USD mixed. Overall the currency markets were a negative price driver for the oil complex last week.