Market Report & Analysis for 6/12/2018 Afternoon Edition

Afternoon Market Overview

Oil prices ended Friday’s trading lower with the complex finishing with a weekly loss after decreasing in value the previous week. Last week WTI crude oil declined while the spot Brent contract declined more than the WTI contract even after a surprise build in US crude oil inventories.

The August Brent/WTI spread narrowed modestly last week with Brent still trading at a strong premium to WTI. The August 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 July WTI contract decreased slightly on the week and has returned to the downward sloping linear regression trading channel.

The August Brent contract decreased more than WTI resulting in the August Brent/WTI spread narrowing by $0.26/bbl or 2.37 percent to $10.72/bbl by the end of the week. The Aug Brent/WTI remained in its current technical trading range last week. The July WTI contract decreased $0.07/bbl or 0.11 percent as total US crude oil stocks increased outside the market expectations. The spot Aug Brent contract decreased by 0.33 percent or $0.43/bbl. The HO and RBOB crack spreads both depreciated versus WTI for the week as refined product inventories were higher while refinery run rates increased. The widely followed 3-2-1 crack spread widened last week driven by the RBOB component.

On the distillate fuel front the July Nymex HO contract decreased for the week by 0.55 percent or $0.0120/gal after a build in distillate fuel stocks. Gasoline prices decreased after gasoline inventories increased on the week. The July Nymex gasoline price decreased by 1.31 percent or $0.0281/gal this past week.