Ceiling found but short-term bear case difficult to make

Commentary summary:

• EBOB blend margins remain open, and RBOB/LatAm arbs out of ARA firmly closed, but timing on selloff from unusually high prompt spreads difficult to call with so much capacity offline

• FCC planned & unplanned turnarounds are also contributing to tight mogas picture, although it should be noted that component diffs are yet to fully reflect true physical market tightness

• Prompt Sg92 spreads are above $2/bbl for the first time since the summer of 2023, supported by a combination of supply outages, spot Indonesian demand, and now a Chinese export picture that looks to be at most in-line with 2024 levels

• Current forward pricing is now at levels which should encourage a supply response from the capacity that remains online, with a particularly wide Sing92/0.5% VLSFO spread pointing to components being redirected from the bunker pool and into upgrading capacity

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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