Will western market stabilise amid emerging arbitrage opportunities?

Commentary summary:

– Improved Margins into Latam, where Europe has become the most cost-effective supplier to Brazil, with up to a 5 cpg margin advantage over the USGC.

– Lower throughput projections and port restrictions are limiting Chinese gasoline exports, supporting the E/W spread.

– ARA emerges as the cheapest option for South Africa, adding to other African outlets like Kenya, Tanzania, and Nigeria.

– Emerging arbitrage and declining naphtha suggest a potential floor for gasoline’s early-year downturn.

The gasoline market witnessed another week of deepening contango in the Atlantic Basin, affecting both EBOB and RBOB, while a rebound in Sing 92, reflected in a higher E/W, impacts the outlook for arbitrage from West to East.

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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