Afternoon Market Overview

Oil prices increased last Friday with the complex ending the week modestly higher for the second week in a row. Oil prices increased across the board for the week. Last week both WTI crude oil and the spot Brent contract were higher with the April WTI contract increasing less than April Brent even after a surprise draw in US crude oil stocks. The April Brent/WTI spread widened last week 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 April WTI contract increased on the week and has now broken out to the upside of the linear regression trend channel. The April Brent contract increased more than the April WTI contract resulting in the April Brent/WTI spread widening by $0.47/bbl or 14.29 percent to $3.76/bbl by the end of the week. The April Brent/WTI spread remained in its current technical trading range last week.

The April WTI contract increased $2/bbl or 3.25 percent as total US crude oil stocks decreased more than the market expectations. The spot April Brent contract increased by 3.81 percent or $2.47/bbl. The HO and RBOB crack spreads both appreciated versus WTI for the week 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 RBOB component.

On the distillate fuel front, the March Nymex HO contract increased for the week by 3.09 percent or $0.0553/gal after a modest draw in distillate fuel stocks. Gasoline prices increased after gasoline inventories increased only marginally on the week. The March Nymex gasoline price increased by 3.29 percent or $0.0242/gal this past week.