Cracks, spreads searching for support as physical market softens

Commentary summary:

• All told the winter gasoline market has not been a bad one. Cracks have been lower than the previous three years, but very constructive vs pre-pandemic levels

• A very workable contango in both EBOB and RBOB markets allowed participants to keep physical markets relatively tight, but they will pay for that in April and May

• The East of Suez market continues to look well supported, with strong demand figures in India and supposedly lower gasoline exports out of China, but also here the picture looks to be turning slightly

• Prompt arbs are difficult to judge given the timings of spec changes, but the picture from mid-March onwards points to a floor for EBOB relative to other regions

Moving into March would typically be a time to look forward with optimism towards Q2, but before we can assess whether that is warranted this year, I would like to afford a quick retrospective on the winter just gone.

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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