Afternoon Market Overview

Oil prices increased modestly on Friday with the complex ending the week strongly higher after decreasing in value the previous week.

Oil prices increased across the board for the week. Last week both WTI crude oil and the spot Brent contract were higher with the June WTI contract increasing less than June Brent after a larger than expected build in US crude oil stocks and in Cushing stocks. The June Brent/WTI spread widened last week with Brent trading at a modest premium to WTI. The June 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 May WTI contract increased on the week and remains in an upward sloping linear regression trend channel. The June Brent contract increased more than the June WTI contract resulting in the June Brent/WTI spread widening by $0.24/bbl or 4.79 percent to $5.25/bbl by the end of the week. The June Brent/WTI spread moved into a new higher technical trading range last week. The May WTI contract increased $5.33/bbl or 8.59 percent even as total US crude oil stocks increased versus a market expectation for a smaller build. The spot June Brent contract increased by 8.15 percent or $5.47/bbl.

The HO and RBOB crack spreads were mixed versus WTI for the week as refined product inventories were mixed with refinery run rates increasing. The widely followed 3-2-1 crack spread narrowed last week driven by the RBOB component.

On the distillate fuel front the May Nymex HO contract increased for the week by 7.27 percent or $0.1424/gal after a modest draw in distillate fuel stocks. Gasoline prices increased even after gasoline inventories increased on the week. The May Nymex gasoline price increased by 5.66 percent or $0.1107/gal this past week.