TC14 vs TC2 flips the Atlantic Basin picture

Commentary summary:

• TC2 down 35WS over the last week has helped to bring the prompt RBOB Arb back to neutral levels, albeit only in the very prompt.

• The opposite picture in TC14 – driven by workable diesel and gasoline arbs into LatAm and the Caribs – has helped to turnaround the relative competitiveness of gasoline arbs out of ARA vs USGC.

• Whilst the relative freight picture is negating some of the bearish pressure on EBOB in particular, wide-open blend margins in ARA should serve to bring down the offers into the window and weigh on the physical market.

• Singapore is looking more constructive from September onwards. August is still showing very open blend margins, but an uptick in regional freight and some slightly higher FOB valuations are seeing landed component diffs for September now higher. Sg92 Sept/Oct spreads have reacted, gaining some strength to post back >$1/bbl.

• With an overall bullish outlook for Sept E/W, it is interesting to note that some SAF and EAFR destinations are getting close to workable for ARA exporters. We are not there yet, but this scenario would probably act as a ceiling for Sept E/W over the coming weeks.

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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