Short-term bullish news may help kickstart summer, but ceiling remains lower than recent years

Commentary summary:

• RBOB arbs are now difficult to work even for the ARA Refiner proxy in our calculations, an unusual signal given recent falls in PADD-1 inventories

• It means that arbs out of ARA are difficult to make work both TA and into WAF/LatAm. Barge market is relying on local demand for now

• EBOB and RBOB Jul/Aug spreads have so far been unimpressed by a slight uptick in component premiums, with E10 blend margins actually still just about workable in ARA

• The Eastern market continues to move from strength to strength, but balance of risk is skewing to the downside here as refining capacity returns

This market update looks a bit different to what I was planning to write yesterday following the news that also the 2nd CDU at BP’s Rotterdam refinery is now offline, further reducing the prompt supply of components into the ARA market at a time when we had just begun to see barge diffs rising and key components moving off their recent floors.

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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