The announcement of the SPR release had only a one day effect on NYMEX crude because of the large inventory in Cushing. Brent continued to fall because there will be a greater effect of the IEA release in Europe where there is no large inventory being held. Since the release is sometime in the near future, Brent has started to trade in contango. Contango trading patterns occur when traders believe that supplies will be adequate in the future. The opposite is backwardation where traders act on the belief that supply will be tight in the future.
The dollar's continued strength versus the euro help to keep WTI prices above yesterday's settlement. It is hard to forecast the direction of crude prices as releases of SPR is so infrequent and the market conditions are very different. Prices were already heading lower and this action by the IEA countries only seems to make analysis more difficult. There is an added effect on the Brent premium because Brent is falling at a greater rate and reducing its premium over WTI.
For the week, WTI-$1.85,$91.16; Brent-$7.69,$105.52; RBOB-16.94¢,$2.7766; HO-23.33¢,$2.7503.
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