Market Report & Analysis for 5/22/2018 Afternoon Edition

Afternoon Market Overview

Oil prices ended Friday’s trading lower but with the complex finishing with a weekly gain after increasing in value the previous week.

Oil prices increased across the board for the week. Last week WTI crude oil and the spot Brent contract were higher with the July Brent contract increasing more than WTI even the draw in US crude oil inventories coming in within the expectations.

The July Brent/WTI spread widened strongly last week with Brent trading at a strong premium to WTI. The July 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 increased on the week and remains in the upward sloping linear regression trend channel. The July Brent contract increased more than the July WTI contract resulting in the July Brent/WTI spread widening by $0.70/bbl or 10.9 percent to $7.14/bbl by the end of the week. The July Brent/WTI remained in its current technical trading range last week. The June WTI contract increased $0.58/bbl or 0.82 percent as total US crude oil stocks decreased within the market expectation. The spot July Brent contract increased by 1.8 percent or $1.39/bbl.

The HO and RBOB crack spreads both appreciated versus WTI for the week as refined product inventories declined more than the market expected while refinery run rates decreased. The widely followed 3-2-1 crack spread widened last week driven by the RBOB component. On the distillate fuel front the June Nymex HO contract increased for the week by 5.18 percent or $0.1115/gal after a strong draw in distillate fuel stocks.

Gasoline prices increased after gasoline inventories decreased on the week. The June Nymex gasoline price increased by 5.64 percent or $0.1193/gal this past week.