Quiet start for E5 barges

Deep Dive Summary:

• RBOB: bullish prompt TA arb, bearish GC CBOB / RBOB.
• EBOB: bearish EBOB spreads.
• SING92: bullish gas E/W.

RBOB

The broader oil complex has weakened since Monday as the market takes the TACO threat seriously. US Treasury Secretary Scott Bessent has stated that an Iran deal and utilisation of the Strait of Hormuz are imminent, further jawboning the market.

This has led to a decline in global flat prices across the gasoline complex. Cracks have followed suit, declining broadly across the complex but still well above their historical norms.

The move has likely been amplified by the increasingly long RBOB COT reporting (particularly when compared to the more neutral positioning in the underlying WTI and ICE Brent markets), further compounding the severity of this reaction in the market.

(TA Arb remains closed in the front)

TA arb opportunities for European exporters continue to remain closed. This has continued to result in materially low import volumes into PADD 1. One of the major drivers in the past few weeks has been volatility in RIN pricing.

This has stemmed from uncertainty surrounding US EPA Small Refinery Exemptions (SREs) under the Renewable Fuel Standard (RFS). This has been settled for the moment, so RVO should be stable at around 33 cpg.

However, there remains an ever-present risk of sudden policy changes from the EPA, particularly at a time when consumer fuel prices remain a political soft spot for the current US administration.

(TA ex-RVO has kept range-bound for Aug swaps)

TA arb ex-RVO for August swaps has generally remained rangebound since the first week of July as PADD 1 inventories continue to decline, particularly in New England. With demand remaining constructive, I am convinced PADD 1 will see further draws over the next few weeks, despite the wide use of A2 on-road grades, which is bullish prompt TA arb spread.

Underlying this view is a likewise weakening barge market in ARA. Looking further ahead, increased component volumes from India expected to arrive in September into New York, making me less bullish further down the curve.

(Early Sep. LATAM arbs retaken by ARA for early September)

As the TA arb continued to weaken over the past week, Houston briefly retook much of the LATAM arb window for early September delivery, though this has now reversed. This reversal is in large part due to a weakening underlying freight market in NWE.

TC2 rates have continued to weaken as a lack of TA arb gasoline demand and a loss of NYH as a naphtha outlet have sent freight rates plummeting. With vessel counts recently as high as 26 MRs within NWE, this has weakened rates in the broader Atlantic basin.

This has left Houston arbs less attractive for early September delivery windows (1st to the 10th) for critical outlets such as Tuxpan, Rosarito, and NYH. While Houston has retained Brazil, Ecuador, and Guatemala, it faces increasing competition from ARA into Peru.

Houston’s ability to retain supply into Santos and Suape may, is less impactful on a volumetric basis than prior months as the Brazilian government raises ethanol content from 30% to 32% on road starting on 1 August.

(A lack of outlets keeps GC basis weak, with some caveats)

All in all, the temporary weakness of Houston landed values seen in the latter half of last week into wider LATAM, along with a closed TA arb for NYH F grade, keeps the outlook for GC cash basis weak.

However, with blend costs for A-grade and M-grade on the rise, closing Houston blend margins, there is a material change in marginal supply. Countering this is the lack of naphtha headed to New York Harbor, impacting the NYH leg of the spread. This acts as an underlying counterbalance for a lack of marginal GC gasoline supply.

Another bullish factor for GC CBOB is USGC MR vessel supply. Current 7-day-ahead vessel counts are set to reach up to 25 vessels available, with incremental demand from arbitrage opportunities at -10 MRs within the USGC. This is bearish for regional freight rates.

If freight rates fall considerably lower, fresh opportunities to load cargo are more likely to be captured by open diesel arbs from Houston to Rotterdam/Barcelona.

EBOB:

(Prompt EBOB spreads decline on weakened barge market)

Since the EBOB market rolled from the July to August swap on Monday (3 August 2026), we have failed to see strong barge demand for E5 in the prompt.

Prompt barges are assessed at +$57/mt against the September swap and we have seen a significant weakening in the EBOB balmo spreads. Given where the current ARA barge market is pricing now, and where it was at the start of July, the prompt spread is likely to continue its trend and weaken further to expiry.

(AG landing competitively across early September delivery windows)

Across the Americas, the underlying mechanism for ARA retaking market share from Houston has been a weakening NWE freight market currently undercutting the Houston export market.

In early September delivery windows, AG lands cheapest across Western, Southern, and Eastern Africa, with AG outside Hormuz (e.g. Duqm) landing cheapest and further supply from India. This has impacted the attractiveness of European-origin cargoes for African buyers partially.

Despite firmer competition into Africa, European exporters are still willing to send cargoes along the route – the Torm Belis fixed on subs towards WAF on 4 August. Weaker freight and EBOB spreads will help these flows continue.

SING 92:

(Singapore origin lands cheaper into the East, while AG lands cheaper to the West)

As AG supply has been pointing westward, Singaporean cargoes have continued to supply the broader Asian market.

Singaporean cargoes currently land cheapest across East Asia, Australia, into the Pacific Coast across of the Americas (Rosarito and Chile), Southeast Asia and Pakistan.

Meanwhile blend costs are rising in Singapore, with LVN remaining historically strong and underlying MTBE gaining. This has firmly closed gasoline blender margins for SING 92 in July, with current blenders losing $2.20/bbl in the prompt.

Considering the backdrop of a weakening European barge market, a tight component picture, and landed values remaining attractive on a global basis, I maintain a bullish outlook on gas e/w for the prompt swaps.

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.
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About Sparta

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