EBOB looks to put pedal to the metal.
18 SEP 26 - 08:27
minutes
- Summary: exit from RBOB Oct/Nov. For Atlantic Basin positioning, continue to remain bullish EBOB Oct/Nov and bullish GC CBOB/RBOB Oct (and near cycles)
- RBOB spreads have continued to appreciate over the week, with the Oct/Nov futures spread reaching over 26 cpg despite reported national builds in EIA weekly inventories. While EBOB Oct/Nov spreads have likewise gained. Cracks continue to gain globally as refining capacity tightens.
- As RBOB has appreciated against EBOB since the start of the week, September TA arb swaps have gained over the past few days. Supported by a PADD 1 draw tightening inventory levels and continued gains in TC2, increasing from WS 116 to WS 146, offsetting losses in the RINs complex.
- While E/W has continued to gain on risks to East of Suez refining.
- Materially, physical flows of TA arbitrage opportunities from NWE refiners into PADD 1 over the next few days are in play, as NWE refiner margins have improved to a near-marginal point, providing econs.
- This has prompted fixtures on the window such as the Hafnia Merlin, fixed on September 17. Bound for early October delivery into New York, per Signal.
- The gains seen in the TA arb have priced Houston exporters out of opportunities into nearly all South American outlets for late October delivery windows, ceding this market share to European-origin exporters.
- This is not to say that Houston exporters have no opportunities. Houston refiners in forward delivery windows via NJA- and JA-compliant vessels continue to offer margin into NYH. Arbitrage opportunities into North American and Central American outlets from Houston exporters land cheapest into the Atlantic Basin in late October delivery windows.
- Pointing towards GC CBOB appreciating relative to RBOB, supporting the continued bullish outlook on A-grade pricing.
- For European exporters, as E/W has continued to gain and freight from the AG has continued to grind higher, destinations in Northern, Western and Southern Africa, along with the aforementioned South American outlets, are finding increased viability.
- Thus, builds reported in ARA gasoline inventories may prove short-lived. With export demand set to rebound at a time when Rhine water levels remain impassable, and crude shortfalls from Sidi Kerir into Europe currently outstanding, all continues to point towards EBOB Oct/Nov gaining from its current +$111.5/mt valuation.
- A key risk to monitor remains the E5 blend margin, which currently sits at +$8.50/mt for ARA blenders, providing opportunities with current component pricing should components be available in the market. A key risk to this availability remains low Rhine water levels.
(ARA arbs into NYH opens in the prompt)
(ARA has become the cheapest landed values into LATAM)
About the Author
Nikolas Plonski, our Oil Market Analyst for the Americas at Sparta, brings experience as a trader from Gent Commodity USA trading diesel and jet paper markets. Nikolas then joined Sparta, where he serves as a cross barrel analyst focused on the Americas.
Connect: LinkedIn
About Sparta
Sparta is the AI leader for commodity trading, home to Leonidas AI, the first decision-making engine for oil and commodity traders. Backed by USD 42 million in Series B funding led by One Peak, with participation from returning investors FirstMark and Singular, the same investors behind AI leaders like Legora, Dataiku, and Synthesia. From independents to multinationals, the world’s leading commodity teams use Sparta and Leonidas AI to move faster, trade smarter, and stay ahead of the market.
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