TA arb and E/W swings open LATAM opportunities for Houston exporters

Atlantic basin cracks and spreads have broadly weakened across the complex over the past day, although Sing92 pricing has generally remained unchanged.

Prompt TA arb has continued to weaken as the underlying RIN complex has continued to sell off, while August TA ex-RVO has sold off from a week prior (-9.15 cpg to -13.1 cpg), while RVO has declined 4.8 cpg since the beginning of July, materially lowering the cost to import into NYH.

Despite this, we have continued to see the physical arbitrage into New York remain closed with delivery windows into the 11th to 15th of August closed for Northwestern European refiners by -5.50 cpg, with all arbs closed until F4 becomes the spec with the first delivery windows with open arbs being the 11th to 15th of September.

The weakening in paper TA arbs has allowed for Houston to regain market share into the broader LATAM market for September delivery windows.

Houston now lands cheapest into Atlantic and Pacific Mexico, Brazil, Paraguay, Colombia, and Peru, while maintaining US inter-PADD destinations for September 01-05 delivery windows.

EBOB continues to remain tight, while holding continued premiums across WAF and holding landed premiums into Colombia and Canada.

Near record-low Rhine water levels contributing to the lack of availability of inter-European barge flows.

Prompt E/W spreads have rebounded since July 28th, with the August swap up $3.90. This has allowed for Houston to become relatively competitive into Pacific Coast Latin America across early September delivery windows, with Singaporean exporters having limited opportunity with Chile remaining destination.

The outlook on arbs in the Americas has materially changed due to the underlying TA arb, flipping the forward Houston loading windows outlook from a bearish picture towards a more constructive view for export volumes.

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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