East of Suez arbitrage strengthens as July window opens

Commentary summary:

• Physical premiums in Asia are surging, especially for heavy qualities.

• Current margins support further flows of both light and heavy grades to Asia.

• Gasoline E/W climbs $1.5/bbl, breaking a two-month downtrend.

• Naphtha paper remains under pressure, but these new opportunities may offer a floor soon.

The arbitrage is emerging even more strongly in the naphtha market as the first half of July window has now been established for deliveries in Asia.

Jorge Molinero is a Commodity Owner at Sparta. Starting his career as a financial analyst with BBVA, Jorge quickly transitioned to market intelligence within the energy sector, spending 4 years as a naphtha analyst with Repsol before joining Sparta in early 2023.

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