TA arb widens are market adjusts to tariffs, European gasoline overhang remains but bullish factors piling up

Commentary summary:

• April TA Arb (net-RVO) has moved out to >9cpg, rising 30% d-o-d to open up the margin also for ARA blenders from mid-March loading onwards

• The move appears to have been as much a continuation of the recent bearish pressure on EBOB as it is any real conviction of a stronger RBOB market, with Apr/May EBOB spreads even approaching flat levels

• USGC pricing is yet to dislocate from the improving situation in PADD-1, closing arb opportunities into the majority of destinations, with even WC Mexico and Montreal now pointing to ARA for resupply over the USGC

• The EoS has broadly moved lower throughout the day, although there is no obvious link between tariffs and the EoS market. If anything, looking further ahead into the summer demand period ahead, the potential for AG barrels to point into PADD-1 is something to keep a close eye on

In an almost exact mirroring of the unwinding of tariff-related pricing in early-February left EBOB on a limb – overpriced and lacking outlets – so the initial reaction to the tariffs on Canadian and Mexican petroleum has left EBOB looking extremely cheap, with plenty of arb opportunities and plenty of reasons to be bullish.

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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