We have repeatedly called for a sustained opening of the transatlantic gasoline arbitrage in order to help ease the tightness seen in the US market. But is our freight-adjusted arb incentive the best measure to look at? By re-calculating the direct blending of ethanol into margins and arb estimates for a refiner producing and distributing E10, we find that not only are there gains to be made in terms of profitability but also that arbitrage conditions are already much more favorable than those for regular gasoline.
The Chinese reopening has certainly injected a fresh set of uncertainties into a market already overrun with unknowns. In the weeks since China has undone much of the zero-Covid policies in place for more than two years, mobility has shown clear signs of picking up and yet, refinery runs surged to new highs months earlier.
Europe remains highly dependent on Russian clean product exports, particularly gasoil/diesel. As we head towards the embargo, it was expected that reliance had fallen, not risen. The ban will, however, bring about a change in global trade patterns for both middle and light distillates.
European road fuels demand to perform better than the last two, pandemic-plagued, years with European governments shying away from re-introducing movement restrictions this fall. However, diesel demand is not going to benefit much from this, as manufacturing activity across Europe is going through its worst month since the start of the pandemic.
