Market Report & Analysis for 5/30/2018 Afternoon Edition

Afternoon Market Overview

Oil prices ended Friday’s trading strongly lower with the complex finishing with a weekly loss after increasing in value the previous week. Oil prices decreased across the board for the week. Last week WTI crude oil and the spot Brent contract were lower with the July Brent contract decreasing less than WTI after a surprise build in US crude oil inventories.

The July Brent/WTI spread widened strongly last week with Brent trading at a strong premium to WTI. The July 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 June WTI contract decreased strongly on the week and has breached the upward sloping linear regression trend channel support area. The July Brent contract decreased less than the July WTI contract resulting in the July Brent/WTI spread widening by $1.42/bbl or 19.9 percent to $8.56/bbl by the end of the week. The July Brent/WTI removed into a new higher technical trading range last week. The June WTI contract decreased $3.49/bbl or 4.9 percent as total US crude oil stocks increased outside the market expectations. The spot July Brent contract decreased by 2.6 percent or $2.07/bbl.

The HO and RBOB crack spreads both depreciated versus WTI for the week as refined product inventories were mixed while refinery run rates increased.

The widely followed 3-2-1 crack spread narrowed last week driven by the ULSD component. On the distillate fuel front the June Nymex HO contract decreased for the week by 2.46 percent or $0.0557/gal after a strong draw in distillate fuel stocks. Gasoline prices decreased after gasoline inventories increased on the week. The June Nymex gasoline price decreased by 2.32 percent or $0.0519/gal this past week.