Prompt RBOB arb wide open, but definite risk of a correction come April

Commentary summary:

• RBOB Arb blows open on wider TA Arb, lower ARA blend costs

• Weak physical premia in both ARA and Houston as hubs compete for swing outlets

• TC2 primed to move higher as RBOB arb firmly in the money, topside risk from high Dangote runs however

• Sing market has benefited from lower Chinese exports so far this year and may continue to do so, but blend costs are making Sing increasingly uncompetitive into export markets

The prompt RBOB arb – and indeed the arb calculation all the day down to early-June deliveries – is now wide open, including for ARA blenders. For context, this is a position which is rarely sustainable and typically has a speedy impact on ARA component premia, TC2, and the underlying TA Arb as supply begins to hit NYH.

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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