Sg92 refusing to give up its strength as EBOB hits a ceiling

Commentary summary:

• Not much has changed fundamentally in the prompt arb picture w-o-w, with the USGC increasingly benefitting from still-tight TC2 and relatively overvalued EBOB to dominate the Atlantic Basin arb competitiveness.

• In the East, refinery outages remain the largest driver of supply tightness, with the Pricing Centre continuing to see backwardation strengthen despite a comparatively uncompetitive arbs (demand) picture.

• Key indicative swing arbs continue to point away from both ARA and Singapore, signaling a removal of marginal demand for both locations which should start to be felt in softer spreads in the coming weeks.

• That being said, at least in terms of EBOB blend margins in ARA, we are back to a more neutral setup, with definitively closed E5 blend margins and just-about workable E10 blend margins in the prompt. This setup typically points to a market quite well balanced on refinery supply.

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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