Afternoon Market Overview

Oil prices ended Friday’s trading session slightly lower with the complex finishing with a weekly gain after increasing in value the previous week. Oil prices increased across the board for the week except for the spot WTI contract.

Last week WTI crude oil and the spot Brent contract were mixed with the June WTI contract decreasing while the June Brent contract increased after a surprise build draw in US crude oil stocks and in Cushing inventories. The June Brent/WTI spread widened strongly last week with Brent trading at a strong 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 June WTI contract decreased on the week but remains in the 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 $0.88/bbl or 15.6 percent to $6.54/bbl by the end of the week. The June Brent/WTI entered a new higher technical trading range last week. The June WTI contract decreased $0.30/bbl or 0.44 percent as total US crude oil stocks increased versus a market expectation for a decline.

The spot June Brent contract increased by 0.78 percent or $0.58/bbl. The HO and RBOB crack spreads both appreciated versus WTI for the week even as refined product inventories were mixed but with refinery run rates decreasing.

The widely followed 3-2-1 crack spread widened last week driven by the RBOB component. On the distillate fuel front the May Nymex HO contract increased for the week by 1.31 percent or $0.0279/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 1.48 percent or $0.0310/gal this past week.