No relief in blend costs

• RBOB: Bullish RBOB Oct/Nov spread, Bullish GC CBOB / RBOB Sep
• EBOB: Bullish EBOB Oct/Nov spread
• SING92: Components find support in Asia; the risk to upside remains skyrocketing freight and open blend margins.

RBOB:

(TA arb swaps have shown RBOB gaining relative to EBOB)

Prompt RBOB spreads and cracks have weakened to start the week. Despite this, managed money net positioning for RBOB (and refined products in the US more broadly) is increasingly skewed long from an OI perspective since Q1 2026.

TA arb prices have continued to strengthen as European barge assessments have sold off from last week’s high at the start of the week.

(Arbitrage opportunities into NYH have improved for European exporters)

Materially, this rally means US gasoline prices are at a point that would incentivise flows of finished grades in early October delivery windows. First arrivals from NWE refiners are expected within the 6-10 October window.

(Component tightness pinching the US market)

Opportunities for Houston exporters have likewise begun to close for prompt loading windows.

This has been driven in large part by the continued gains within the underlying components market, despite a relatively supportive freight market for arbitrage opportunities from the USGC.

Alkylate tightness has had a notable impact on A Grade pricing as it still comprises over 40% of the current optimal blend, despite its recent price appreciation. Meanwhile, M-grade demand is increasing as winter specifications start to come into focus for F4 grade, prompting sales prices to continue to rise in the coming weeks.

(Americas export opportunities favour Houston origin cargoes)

For windows with October load and discharge completion, European high-octane component tightness and rising freight from Singapore have kept landed values for Houston-origin cargoes most attractively priced across Central and North American destinations.

The one contested arb from the past week has been Rosarito as an outlet for late October delivery for Houston exporters. Freight from Asia into the region has continued climbing sharply, ultimately pricing out Asian exporters despite declines in regional blend costs.

South America remains contested for landed values as high-octane blends continue to prefer Houston-origin cargoes while lower-octane blends favour Rotterdam-origin cargoes.

(USGC 7-day ahead vessel supply set to gain)

Despite the Houston components market continuing gains, CPP vessel supply rising from 18 MRs to 30 MRs in the 7-day-ahead window points to cheaper freight.

With US volumes continuing to land competitively across North America and arbitrage opportunities into New York closed in the prompt, this suggests a bullish outlook for RBOB spreads and GC CBOB/RBOB differentials.

However, given current trade imbalances and the lack of European volumes arriving in September, driven by steep backwardation in the barge market, RBOB prices and GC CBOB prices look set to gain.

EBOB:

EBOB spreads, cracks and arbs within the prompt September swap are weakening as the barge market took a step down over the weekend from the extremes seen in the week prior as ARA barge trade liquidity thinned.

As this trading activity has dried up, values for deferred swaps, cracks and arbs from the October contract onwards have moved lower. This is despite the market continuing to grapple with a tight high-octane component market.

(European components continue to remain bullish)

Reformate (heavy) prices have continued rising, currently +$15/mt higher than done last Wednesday, at $179/mt versus EBOB. CCS (high RVP) has also gained as current optimal blends call for around 15.8% for September 60 kPa specifications.

An additional point of component support is the receding of Rhine water levels, back again to unworkable levels. Other factors to point to are the reopening of MED light naphtha arbs into NWE from Cartagena for September delivery and of Jeddah-origin light naphtha arbs for October delivery, despite Rotterdam to Chiba OSN naphtha arbs also opening for October loading.

This implies that naphtha is likely to remain weaker than gasoline as supply gains from the Red Sea.

(E5 blend margin collapse)

The gains made in components have continued to push up regional blend costs, even as regional barge assessments are marked lower and paper markets weaken alongside them, in part on seasonality as players roll from 60 kPa September specifications to 90 kPa October specifications.

This has failed to open the E5 blend margin as the region remains challenged logistically (Rhine water levels) and physically for high-octane components, with margins collapsing to -$29/mt for ARA blenders as component costs have remained tight despite weakness in gasoline markets.

(Gasoline landed values in mid-October delivery windows across Africa)

European gasoline landed values are more attractive across Africa, despite the tightness in components, due largely to moves in gasoline assessments and paper markets this week.

Weakness in the gas-nap spread (despite continued gains in blend costs), is helping ARA land considerably more attractively in late October delivery windows, helped also by cheap freight market in the region.

(mid-October LATAM delivery windows)

North America remains out of the question for European exporters in the very front loading windows despite the TA-arb rally, though by late September loading windows the TA arb opens again, supporting current pricing.

LATAM continues to support exports from Europe. Blend costs for Colombian, Ecuadorian and Peruvian grades have declined to a point where they land competitively against Houston exporters as USGC components rise and freight remains supportive for mid-October deliveries.

For EoS exporters, freight remains a constraint on limited physical output from the AG while supply from Asia remains constrained.

Overall, with a lack of a true solver for blend costs, landed values in October favouring ARA-origin cargoes, and blend margins increasingly negative despite weaker physical assessments, the October/November EBOB spread appears undervalued at current levels considering where physical barge assessments are marked.

Gas-nap remains a slightly more challenging position should the MOPJ market begin to significantly pull on an already tight Atlantic Basin market, making the position less directionally clear than seen in weeks prior when Asian markets did not have import opportunities from Rotterdam.

However, should the arb remain open only temporarily, volumes provided by LR1s from Jeddah would quickly support gas-nap pricing.

SING 92:

(Gas E/W and spreads have found real support)

As opposed to some of the weakness in spreads and cracks seen within the European market, the Singaporean market is catching with the wider gasoline complex. October swaps (and forward tenors) have gained, causing a rebound in the E/W spread.

(AG component premiums rally)

At a more macro level, concerns of physical crude availability are resurfacing on the back of increased US-Iran kinetic activity. This is supporting gains across EoS product prices, and including components.

This means reformate tightness is no longer exclusively a European issue as we exit the summer driving season, with reformate in the AG increasing from $377/mt a week prior to currently being assessed at $422/mt while alkylate closely follows these gains.

This has contributed to closing arbitrage opportunities from AG into the Atlantic Basin, with freight gains an additional barrier to overcome.

(Asian gasoline markets have a solver, the same cannot be said for E5)

A key differentiator between the prompt SING92 and EBOB markets remains the continued gains in underlying blend costs within Europe on a lack of high-octane components in the region. This has prompted E5 blend margins to remain broadly negative within ARA.

In contrast to Europe, Asian component price gains have been outpaced by regional sales prices, opening the SING92 blend margin. With the blend margin in Asia opening as the European E5 blending margins remaining firmly closed, steep freight from Asia into the Atlantic Basin continues to keep the strength in the west intact.

While further upside to the E/W appearing limited relative when compared to prices in the Atlantic Basin.