Where is the limit to TA arb downtrend?

Commentary summary:

– The structural correction in the TA arb reflects a shift in the US market, where the balance has eased significantly in recent weeks.

– US-Europe spread has continued to trade lower since mid-October, with few near-term supports in sight.

– Europe’s competitiveness in Mexico briefly positioned it as the cheapest supplier for January barrels, but the US has regained preference in this market.

– The closure of the E10 blending margin in Europe reduces opportunities for blenders, though Europe’s market still supports good arbitrage opportunities in the East.

A quiet week in the gasoline market regarding timespreads, while the last two sessions have brought significant corrections in cracks across all regions.

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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