Afternoon Market Overview

Oil prices increased on Friday with the complex ending the week strongly lower after two weeks of appreciation in value.

Oil prices decreased across the board for the week.

Last week both WTI crude oil and the spot Brent contract were lower with the May WTI contract decreasing less than May Brent even after a larger than expected build in US crude oil stocks but with another decline in Cushing stocks to the lowest level since the end of 2014 The May Brent/WTI spread narrowed last week with Brent still trading at a 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 decreased on the week and has moved back into the downward sloping linear regression trend channel. The May WTI contract traded in sync with the April contract. The May Brent contract decreased more than the May WTI contract resulting in the May Brent/WTI spread narrowing by $0.35/bbl or 9.64 percent to $3.28/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 decreased $2.30/bbl or 3.62 percent as total US crude oil stocks increased more than the market expectations. The spot May Brent contract decreased by 3.98 percent or $2.67/bbl. The HO and RBOB crack spreads both depreciated versus WTI for the week as refined product inventories were mixed with refinery run rates decreasing. The widely followed 3-2-1 crack spread narrowed last week driven by the ULSD component.

On the distillate fuel front the April Nymex HO contract decreased for the week by 4.71 percent or $0.00930/gal after a modest draw in distillate fuel stocks. Gasoline prices decreased after gasoline inventories increased on the week. The April Nymex gasoline price decreased by 4.43 percent or $0.0882/gal this past week. On the financial front global equity markets were mostly lower on Friday and lower for the week. The EMI Index decreased after increasing for the previous two weeks.

The EMI Index was lower by 2.43 percent for the week with the year to date gain at 2.7 percent. Two 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 12.3 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 higher for the week with the Yen/USD and the Euro/USD also higher. Overall the currency markets were a negative price driver for the oil complex last week.