The backwardation between FOB Amsterdam, Rotterdam Eurobob gasoline barges and the August FOB Rotterdam Eurobob swap was assessed at $21/mt Monday, the widest since November 22, 2012, Platts data shows, tracking RBOB futures, sources said.
The FOB AR Eurobob barges market was assessed at $1,036/mt Monday, with the front month swap being at $1,015/mt.
The backwardation in RBOB futures steepened last week with the August-September spread trading above seven cents per gallon Monday. "[This is] due to the hiccup at Irving refinery and some other refineries in the US...[additionally] lack of arbitrage barrels" a source said referring to the strength on RBOB.
The August NYMEX RBOB versus ICE Brent futures crack traded at $22.20/b at 1510 GMT, slightly higher than at Friday's close. Higher US RBOB futures have supported the Eurobob gasoline market in Northwest Europe. "[As] the arbitrage has opened to US, the market is short in Europe now," a source said. "I think non-oxygenated grades were selling well, and now US grades as well," another source added.
The failure of Eurobob to track all of RBOB futures' gains, led to the US arbitrage swap widening. The US arbitrage swap is the difference between the Eurobob swaps and NYMEX RBOB futures. One source reported the August arbitrage swap was trading around 13.7 cents/gal at 1630 London time Monday.
However, despite the wider US arbitrage swap, some market participants still considered the physical arbitrage being unworkable because of the blending economics of US gasoline grades.
"Pricing wise the strength in RBOB contract versus Northwest Europe seems OK...but looks like the RINs market might be hindering any real progress" a source said.
The US Environmental Protection Agency issues RINs to track renewable fuel usage throughout the supply chain.
The D6 (corn ethanol) RINs for 2013 were assessed at record high of $1.32/RIN Monday. Market sources said that the prices continued to be driven by aggressive buying interest from obligated refiners needing to meet the targeted mandate in the Renewable Fuel Standard.
