Oct Gas-Nap spread looking more bullish here
- Gasoline spreads in the European market have had a quiet start to the week, generally remaining unchanged, while EBOB cracks have continued to gain as global refining capacity remains tight and underlying crude markets are impacted by increasing crude flows from the Strait of Hormuz.
- TA arb swaps have continued to gain, providing an export opportunity for NWE refiners into New York for delivery windows up until 25 October, while East of Suez flows into the Atlantic Basin continue to be hindered into New York by persistently expensive freight.
- Late October delivery windows into South America and Western, Northern and Southern Africa widely favour inexpensive landed European-origin cargoes at the expense of Houston- and AG-origin exporters.
- As RBOB spreads have continued to gain, European landed values have become increasingly attractive into North America, with the difference between Houston and ARA exporters into Montreal narrowing considerably.
- Within naphtha markets, NWE naphtha spreads have weakened considerably to start the week. This is due in large part to pervasive demand weakness in Europe and Asia despite a tight supply environment.
- Export opportunities for naphtha from Rotterdam continue to be expressed by an open margin into Brazil, while remaining closed towards Chiba and New York as FOB values have continued to gain alongside increasing freight rates, closing NWE export opportunities into Chiba and New York for October loading windows.
- The open LR1 arbitrage window from Jeddah into Rotterdam for October deliveries serves as a bearish factor, implying that any additional cargoes loaded towards Rotterdam would add sell-side pressure to the market.
- Notably, demand for naphtha from gasoline blenders remains firm. E5 blending margins for ARA blenders are +$7/mt for September and +$0.50/mt for October, implying demand for gasoline components, including gasoline-spec naphtha, remains present.
- Overall, European gasoline and naphtha fundamentals remain highly divergent despite open E5 blending margins, which points to gains in October Gas-Nap spreads.
(Oct Gas-Nap, Oct/Nov Nap NWE swap, Oct/Nov EBOB spread)
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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