Europe’s gasoline exports outlook improves with new arbitrage opportunities

Commentary summary:

– A drop in European blending costs led by light reformate premiums and EBOB correction has revitalized Europe’s gasoline export appeal.

– Tighter U.S. gasoline balances and reduced TC2 costs have also reopened arbitrage from Europe to NYH for refiners.

– Europe has become the cheapest supplier into East Africa, Indonesia and other Eastern destinations.

– E/W rally could peak if new European export options into the East materialize by the end of the year.

Amid a $4/bbl rise in crude futures following OPEC’s delay in the output hike and pending the results of the U.S. elections, the gasoline market has corrected upward in recent days. SING 92 timespreads and the E/W have been the leading indicators driving this rise over the past week.

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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