The bullish outlook shifts across the Atlantic

 Commentary summary:

• The European rally mirrors its export outlook in the Atlantic basin but remains strong toward the East.
  
  
• However, the return of idle refineries and lower TA arb could limit further European price increases.
  
  
• RBOB now holds the most bullish expectations, driven by a tighter balance and improved export competitiveness.
  
  
• The Eastern market remains weak, with contango dominating the curve despite supply risks from unplanned shutdowns in Malaysia.

Gasoline cracks gained during the week, driven by a $5/bbl drop in Brent futures and tighter Westen balance. The most volatile market has been Europe, with a sharp rise in both cracks and spreads, moderately shifting the arbitrage outlook for the coming weeks. As we have mentioned in recent market commentaries, arbitrage options from Europe were very broad, with significant discounts versus Houston in LATAM, improving the arbitrage outlook for NYH and pricing into East Africa outlets for deliveries throughout Q4.

This excess of export alternatives in the European market has driven the EBOB complex upwards in recent weeks. However, the return of idle refineries and tighter TA arb suggest that the upward trend could be limited in the short term.

Jorge Molinero is a Commodity Owner at Sparta. Starting his career as a financial analyst with BBVA, Jorge quickly transitioned to market intelligence within the energy sector, spending 4 years as a naphtha analyst with Repsol before joining Sparta in early 2023.

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