Afternoon Market Overview

The oil complex ended last week modestly lower for only the second weekly price decline in the last seven weeks. Oil prices decreased across the board for the week.

Last week both WTI crude oil and the spot Brent contract were lower with the April WTI contract decreasing less than April Brent after a larger than expected build in US crude oil stocks.

The April Brent/WTI spread narrowed strongly last week but with Brent still trading at a premium to WTI. The April 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 March WTI contract decreased on the week and is now in the lower half of the upward linear regression trading channel. The April Brent contract decreased more than the April WTI contract resulting in the April Brent/WTI contract narrowing by $0.67/bbl or 16.03 percent to $3.51/bbl by the end of the week.

The April Brent/WTI spread moved into a new lower technical trading range last week. The March WTI contract decreased $0.69/bbl or 1.04 percent as total US crude oil stocks increased more than the market expectations. The spot April Brent contract decreased by 1.36 percent or $0.90/bbl.

The HO and RBOB crack spreads both depreciated versus WTI for the week even as refined product inventories decreased with refinery run rates also decreasing. The widely followed 3-2-1 crack spread narrowed last week driven by the ULSD component. On the distillate fuel front the March Nymex HO contract decreased for the week by 3.77 percent or $0.0740/gal after a modest draw in distillate fuel stocks. Gasoline prices decreased even after gasoline inventories decreased on the week.

The March Nymex gasoline price decreased by 2.82 percent or $0.0543/gal this past week.