Atlantic Basin better balanced after EBOB selloff on Dangote return rumours

Commentary summary:

• Prompt spreads fell more than cracks last week, but have found a floor for now as market remains concerned over ability of key units to return online

• Atlantic Basin arbs have somehow balanced out between ARA and USGC, with a handful of destinations opening to ARA on lower TC2/higher TC14.

• We should be starting to price the return of capacity across Europe and the US in the coming weeks.

• Combined with seasonally lower demand, Q4 cracks have further room to come off (but may be supported at the margin by a softer crude market).

Last week saw the EBOB market selling off into the news that potential strikes and further outages at the Dangote refinery had been largely averted. EBOB spreads in particular had gotten very hot, and the correction we called for brought Nov/Dec spreads back into more ‘reasonable’ territory, even if they remain towards the upper end of the seasonal range.

Philip Jones-Lux is Senior Analyst for Sparta. Having worked with organisations such as JBC Energy and RP Global, Philip is a seasoned energy market analyst with expertise across the oil barrel and power markets

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