A wide contango structure in NYMEX RBOB gasoline futures and the US' upcoming switch to summer grade gasoline have opened up arbitrage opportunities for gasoline to move from Asia to the US West Coast, industry sources said Friday.
So far, an estimated 60,000-90,000 mt of low-sulfur conventional and CARBOB grade gasoline could potentially head to the US West Coast from Singapore and South Korea sometime in late February through to March.
To date, 12,851 mt of gasoline was seen exported from Singapore to the US in the week ended February 23, weekly trade data from Singapore's government agency International Enterprise Singapore showed.
This compares with 10,163 mt of exports for the entire month of January.
Additional interest for April-loading cargoes were also detected, although some of these inquiries were heard as tentative, given concerns over whether the cash differentials in the US markets can be sustained.
The interest has come on the back of a sustained steep contango seen between front-month March NYMEX RBOB futures and April RBOB futures, at $6.64/barrel on Thursday, based on their respective settlement values of 271.67 cents/gallon and 287.49 cents/gal.
And at 0830 GMT Friday, close of Asian trade, Asia's benchmark Mean of Platts Singapore 92 RON gasoline was assessed at $117.04/b, while NYMEX RBOB futures, at 272.36 cents/gal for March and 288.69 cents/gal for April, were at a contango of $6.86/b.
The lumpsum freight between South Korean and the USWC was assessed at $1.15 million barrels, equivalent to $4.54/b.
Arbitrage movements from Northeast Asia and Singapore were earlier constrained by refinery turnarounds and outages in Northeast Asia and relatively high Asian price bencharks.
But the lack of arbitrage movements from Northeast Asia was more than offset by movements from South Asia into the US' east coast.
Up to 360,000 mt were estimated to have been fixed for loading in the second half of February and first-half March from Indian refiner Reliance Industries' 580,000 b/d refinery at Jamnagar -- either by the refiner itself or its gasoline lifters -- to the US or into storage facilities in Bahamas.
