Light Ends
Light Distillates - Gasoline
EBOB spreads remain in deep contango, showing strong storage econs that are keeping prompt components supported.
Rumours of Dangote refinery returning fully operational/struggling to return are driving large short-term moves in cracks especially.
E/W is currently very much pointing to AG resupply for WAF, a typical floor for the E/W.
Q2 spreads are under pressure, but still in backwardation. Apr/May looks the most likely to dip into contango from here.
The Eastern markets were well-supplied with gasoline in Jan, leading to a very weak Sing 92 crack and spreads going into contango.
Strong bear plays from major players before Chinese New Year pushed Sing92 and E/W to new lows.
Both feel like a buy from here.
Light Distillates - Naphtha
Naphtha’s bullish run in recent weeks has been predicated on Iran fears (wider E/W), and the redirect of USGC naphtha into Venezuela.
Straits of Hormuz disruptions would affect naphtha the most as 40% of naphtha flows to Asia via this route. The worry would be expressed in a wider Nap E/W.
Nap NWE and European naphtha physical premiums have risen to attract disrupted barrels out of the Med.
