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Market Overview
Mogas: Physical and paper to clash in TA arb
Gasoline continues to draw well beyond seasonal norms, particularly in PADD 1 and PADD 3. Trade balances look set to remain bullish over the coming weeks, with TA arbs closed.
Despite Monroe coming back online, PADD 1 continues to remain short with much of the current weakness due to EBOB strength. Given the lack of sustained imports, we are expecting paper TA arbs to price in imports.
A bullish EBOB market has become uncompetitive into LATAM, allowing Houston to price into almost all Atlantic LATAM delivery regions.
Mogas: Nap demand strong in the Americas
Tightness in the mogas market and blending demand are keeping naphtha demand in NYH and USGC tight.
AThis continues to keep the USGC-into-NYH arb open as ARA tightens on an equally tight component market and high petchem utilisation.
In turn, NWE flows into the US have stayed low.
As the naphtha E/W has rallied, NYH and USGC prices should stay supported, with the East beginning to demand western cargoes.
