E/W blows out on Singapore weakness, but supply-side tightness on the horizon points to a reversal on the cards

Commentary summary:

– The blowout in the gasoline E/W spread has come as something of a surprise, with supply expected lower as refining margins pressure expected to impact Indian and Chinese refiners most

– Front-month Sg92 has moved into contango for the first time since November, but the E/W moves have opened arb opportunities across the Pacific as well as blocking any further flows from Europe into the EoS

– In Europe, export opportunities to LatAm and WAF remain, but climbing MR rates (TC2) have cut off TA arbs and the EBOB blend margin is closed, keeping a firm lid on EBOB for now

– Mogas/diesel spreads are pointing strongly towards diesel production globally, trimming mogas yields and likely setting up lower inventory builds and a stronger Q2

The reaction to crude availability issues presented by the latest round of sanctions on vessels carrying Russian oil has – somewhat surprisingly – thus far been felt most strongly in the E/W spread, which has blown out beyond $3/bbl in recent days on the back of a sharp downtick in the Sg92 market.

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

Sparta is a live, market intelligence and forecasting platform that enables oil traders, refiners, banks, hedge funds and wholesalers to have access to real-time and global actionable insights to capture market opportunities before others.

To find out how Sparta can allow you to make smarter trading decisions, faster, contact us for a demonstration at sales@spartacommodites.com