Afternoon Market Overview

Oil prices decreased across the board last week, but prices recovered strongly on Friday suggesting the short-term downside correct seen over the last week or so may be coming to an end. This week both WTI crude oil and the spot Brent contract decreased modestly with RBOB leading the way lower. The January Brent/WTI spread narrowed modestly last week with Brent still trading at a strong premium to WTI. The December 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 December WTI contract decreased on the week and remained in its current technical trading range. The January WTI contract traded mostly in sync with the spot December contract. The January Brent contract decreased more than WTI resulting in the January Brent/WTI contract narrowing by $0.53/bbl to $6.01/bbl by the end of the week. The January Brent/WTI spread remained in its current technical trading range last week. The HO and RBOB crack spreads were mixed versus WTI for the week.

The RBOB crack spreads depreciated versus while the ULSD crack appreciated. The widely followed 3-2-1 crack spread narrowed last week driven by the RBOB component. The December WTI contract decreased $0.19/bbl or 0.33 percent as total US crude oil stocks increased versus a market expectation for a draw. The spot January Brent contract decreased by 1.26 percent or $0.80/bbl.

On the distillate fuel front the December Nymex HO contract increased for the week by 0.60 percent or $0.0117/gal even as distillate fuel inventories decreased less than the market expectations. Gasoline prices decreased after gasoline inventories increased on the week. The December Nymex gasoline price decreased by 3.74 percent or $0.0677/gal this past week.On the financial front global equity markets were mixed last week. The EMI Index increased on the week with markets also mixed on Friday.

The EMI Index was higher by 0.35 percent for the week with the year to date gain widening to 18.2 percent. All ten bourses in the Index are still in positive territory for 2017 with London in the worst performing spot in the Index with Hong Kong still in the top spot with a 32.7 percent gain for the year. The higher value direction in global equity markets last week was a positive price driver for the oil complex. On the currency front the US dollar Index traded lower for the week with the Yen/USD and the Euro/USD higher. Overall the currency markets were a positive price driver for the oil complex last week.