Oil market: week in review -Some healthy consolidation  Macquarie Research,

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Oil market: week in review
Some healthy consolidation
 Brent and WTI both fell this week from last Friday’s highs, losing -2.4% (to just
under US$124/b) and -2.9% (to below US$110/b), respectively. Brent’s premium
to WTI has widened to around US$14/b, as WTI’s weakness prevails. Crude spot
price correlation with both equities and EUR/USD was significant, as markets
digested several reports citing lower economic growth estimates stemming from
oil price-driven demand destruction. The fighting in Libya is ongoing and slowmoving,
with little progress being made from either side, but the death toll
climbing. DOE data reported another headline crude build, a large draw in product
stocks, and continued sluggish demand. The CFTC report showed a healthy
decrease in non-commercial net futures positions, while total open interest
reached a new high.
 Equity markets were lower this week, selling off on global growth concerns but
gaining on Friday following some positive economic reports. The S&P500 ended
the week lower, falling -60bps w/w to close just below 1320.
 Looking forward, we continue to keep a close watch on MENA politics and other
macro economic news, while also monitoring consumer reaction to increasing
energy costs. (Note: we do not think prices are at demand-destroying levels yet,
and would estimate this developing some +$20/b from today’s prices).