East tightening, RBOB softens despite closed arbs

Commentary summary:

• The Atlantic Basin picture is complicated by the conspicuous disengagement of RBOB and EBOB, with RBOB cracks trading sideways and spreads narrowing whilst Sep/Oct EBOB continues to gain

• From a fundamental’s perspective, only the arbs into Mexico, Canada, Florida and LatAm pointing to ARA temporarily are supportive of this relative support for the European complex over RBOB.

• The upside to EBOB has at least been in line with our call for a narrower E/W spread, albeit that has been driven by support in Asia rather than the anticipated softening of the European market. Sg92 spreads have rallied on the back of slowing Chinese exports and a return of Indonesia buying to the spot market.

• Lower Indian throughput may also be contributing to the improvement in Sg92 spreads and cracks over the last few days – although it remains unclear the full extent of the impact of lower Russian crude inflows on Indian throughput

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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