Market Report & Analysis for 6/19/2018 Afternoon Edition

by | Jun 18, 2018 | EMI, Fuels & Markets, Industry News

Afternoon Market Overview

Oil prices ended Friday’s trading lower with the complex finishing with a weekly loss after decreasing in value the previous week. Last week WTI crude oil declined while the spot Brent contract declined more than the WTI contract after a surprise draw in US crude oil inventories.

The August Brent/WTI spread narrowed strongly last week with Brent still trading at a strong premium to WTI. The August 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 July WTI contract decreased on the week and remain in the downward sloping linear regression trading channel.

The August Brent contract decreased more than WTI resulting in the August Brent/WTI spread narrowing by $2.34/bbl or 21.8 percent to $8.38/bbl by the end of the week. The Aug Brent/WTI moved into a lower technical trading range last week. The July WTI contract decreased $0.68/bbl or 1.03 percent as total US crude oil stocks decreased outside the market expectations. The spot Aug Brent contract decreased by 3.95 percent or $3.02/bbl.

The HO and RBOB crack spreads both depreciated versus WTI for the week even as refined product inventories were lower 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 July Nymex HO contract decreased for the week by 3.57 percent or $0.0773/gal after a draw in distillate fuel stocks.

Gasoline prices decreased after gasoline inventories decreased on the week. The July Nymex gasoline price decreased by 4.35 percent or $0.0921/gal this past week.