NYMEX crude futures settled lower Friday, capping a volatile week throughout the oil complex, as the market sought a definitive direction.
NYMEX November crude settled $1.83 lower at $89.88/barrel, while ICE November Brent settled 56 cents lower at $112.02/b.
The spread between the two contracts settled at $22.14/b after hitting $22.34/b around 1:50 p.m. EDT, the widest the spread as been since October 14, 2011, when it settled at $27.88/b.
NYMEX products were mixed, with NYMEX November RBOB settling 96 points higher at $2.9525/gal. November heating oil settled 3.25 cents lower at $3.1559/gal.
"The crude market has been just up and down over the past few days," Jacob Correll, an energy analyst at Schneider Electric, said. "It's been directionless, with a lot of volatility, and fairly counter-intuitive, if you look at [Friday's] jobs number."
The US Bureau of Labor Statistics data showed Friday that non-farm payrolls for September rose 114,000 and the unemployment rate fell 0.3 points to 7.8%.
"Today's selloff was probably due to yesterday's increases," Correll said, agreeing that investors were likely seeking to take profits ahead of the long holiday weekend in the US.
Correll noted that headwinds coming out of Europe, with the debt crisis far from resolved and ambiguity surrounding the Spanish bailout, combined with tightness in product stocks and rising crack spreads supporting crude, made it difficult to gauge a direction in the market.
Meanwhile, spot market gasoline tightness on the US West Coast "likely provided at least a little support to RBOB, considering the rest of the complex was clearly lower," according Correll.
California's gasoline market tightness was reflected by ExxonMobil on Friday placing its West Coast fuel terminals on allocation, which followed Valero Energy on Thursday halting sales of spot unbranded gasoline at the rack in California.
Refinery issues were not limited to the West Coast, JP Morgan's global commodities research and strategy group said in a note. "Recent refinery fires and other outages on the US West Coast and US Gulf Coast have contributed to surging oil product cracks," it said.
The California Independent Oil Marketers Association was awaiting word Friday from the state on a request the group made earlier this week to permit imports of non-CARBOB gasoline into the state.
CARBOB spot differentials had risen 95 cents/gal in the first four days of this week, triggered by a power failure early Monday at ExxonMobil's Torrance refinery near Los Angeles, before sliding back significantly Friday.
BRENT-WTI SPREAD SEEN REMAINING WIDE
Meanwhile, the US market remained disconnected from the Brent benchmark.
"It's going to stay wide and keep getting wider," said Carl Larry, president at Oil Outlooks and Opinions. "Brent is fading from relevance, and I think the rate of decline in the North Sea has been pretty significant over the past few years. Any new investment for production is going to be focused in other areas like Latin America and the US shale plays."
Schneider Electric's Correll was not surprised the spread has maintained its strength. "Most of the consensus is that the spread was going to narrow into 2013, with the Seaway expansion," he said. "It's definitely not surprising as glut in Cushing has not cleared. It's not that the glut is building, it could be that it is declining at a slower rate.
