Market Report & Analysis for 7/10/2018 Afternoon Edition

Afternoon Market Overview

Oil prices ended Friday’s trading mixed with crude oil prices higher and refined products lower. However, the complex finished with a weekly loss after increasing in value the previous week. Last week WTI crude oil decreased less than the spot Brent contract even after a build in US crude oil inventories but with an increase in OPEC production which will impact Brent more than WTI.

The Sep Brent/WTI spread narrowed last week with Brent still trading at a strong premium to WTI. The Sep 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 Aug WTI contract decreased on the week as did the Sep WTI contract.

The spot Sep Brent contract decreased more than Sep WTI resulting in the Sep Brent/WTI spread narrowing by $1.23/bbl or 18.2 percent to $5.54/bbl by the end of the week. The Sep Brent/WTI moved into a lower technical trading range last week. The Aug WTI contract decreased $0.35/bbl or 0.47 percent as total US crude oil stocks increased outside the market expectations. The spot Sep Brent contract decreased by 2.93 percent or $2.33/bbl. The HO and RBOB crack spreads both depreciated versus WTI for the week as refined product inventories were higher 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 Aug Nymex HO contract decreased for the week by 1.87 percent or $0.0413/gal after a build in distillate fuel stocks. Gasoline prices decreased after gasoline inventories decreased on the week. The Aug Nymex gasoline price decreased by 1.98 percent or $0.0427/gal this past week.