Market Report & Analysis for 6/7/2018 Afternoon Edition
Afternoon Market Overview
Oil prices ended Friday’s trading strongly 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 was slightly higher after a surprise build in US crude oil inventories. The August Brent/WTI spread widened strongly last week with Brent 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 strongly on the week and has breached the upward sloping linear regression trend channel support area. The August Brent contract increased resulting in the August Brent/WTI spread widening by $2.29/bbl or 26.3 percent to $10.98/bbl by the end of the week. The Aug Brent/WTI moved into a new higher technical trading range last week.
The July WTI contract decreased $2.07/bbl or 3 percent as total US crude oil stocks increased outside the market expectations. The spot Aug Brent contract increased by 0.42 percent or $0.32/bbl.
The HO and RBOB crack spreads both appreciated versus WTI for the week as refined product inventories were higher while refinery run rates increased. The widely followed 3-2-1 crack spread widened last week driven by the ULSD component.
On the distillate fuel front the July Nymex HO contract decreased for the week by 1.3 percent or $0.0289/gal after a build in distillate fuel stocks. Gasoline prices decreased after gasoline inventories increased on the week. The July Nymex gasoline price decreased by 1.42 percent or $0.0309/gal this past week.