Sparta insights correctly predict market trends to drive increased trading opportunities

Challenge: Validating traders’ bullish position

In early February 2024, the distillate market began experiencing a downward trend in both ICE GO spreads and cracks. This intensified over the following months as the market moved towards April’s ICE GO expiry.

Against a backdrop of continuing geopolitical uncertainties – including Russian diesel sanctions and refinery attacks, plus tensions in the Middle East – allied with continuing light crude slates in Europe, many traders lacked the conviction to move into a bearish position.

The challenge was to use data analysis to determine whether traders’ bullish positions were justified. Misreading distillate market movements could mean missing out on trading opportunities.

“Considering we are in peak tars, really I’m broken and lost, looking for a reason to be constructive here.”

Trader

Solution: Sparta insights point to a bearish market

Leveraging the insights from the Sparta platform, we were able to challenge this prevailing bullish sentiment. Our platform revealed early indications of a bearish trend, enabling us to anticipate market movements before many others.

By utilising the results from our platform, we identified open arbitrage routes into Europe from major diesel regions AG, WCI, USGC and even USAC. This insight – strongly indicated by increases in marginal supply – led us to maintain a bearish outlook on European cracks and spreads in the short to medium term. Even when European diesel cracks and spreads briefly showed positive moves at the start of March, we remained bearish, guided by the insights derived from our platform.

Results: Correctly predicting market movements to unlock trading opportunities

The Sparta platform played a crucial role in overcoming the prevailing bullish sentiment in the distillate market. By providing early insights and challenging conventional market beliefs, we enabled our clients to make informed trading decisions with conviction and effectively navigate the volatile distillate market landscape.