EBOB upside stalls for now, USGC exports likely to start Q2 strong

Commentary summary:

• TC2 may still have some upside as fixing activity filters through from recent open blender margins and continued open refiner margins, but faces some headwinds from missing exports into the rest of the Atlantic Basin

• E10 blend margins are moving closer to open, providing another potential ceiling for EBOB spreads in the short-term, but the drawdown on ARA inventories should be picking up pace now and May/Jun EBOB spreads still look like a buy

• ARA reformate premiums in particular look undervalued now as gas-nap has taken another turn higher, whilst upside to components in the USGC has largely been offset by a wider GC Unl 87/RBOB spread

• The USGC is looking primed to see an uptick in gasoline exports in the coming weeks, with also WC Mexico arbs open on paper now from PADD-3 as Asia remains comparatively tight on supply-side issues

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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