The gasoline Med/NWE spread — the differential between the FOB Med gasoline cargo assessment and the FOB Northwest European Eurobob gasoline barges — reached a five-week high Monday as North African demand helped strengthen Mediterranean gasoline while the NWE physical weakened on the back of marginal arbitrage opportunities.
The Med/NWE spread strengthened to minus $2.50/mt Monday, up from minus $6.75/mt on Friday.
This was the highest value since March 20, when the spread was assessed for the last time in positive territory at $12.75/mt.
Sources said a recent tender from Algeria’s Sonatrach for a larger-than-usual volume of six 30,000 mt cargoes in May had strengthened premiums for Mediterranean gasoline.
“It’s…more than usual,” said a trading source with reference to Algerian demand.
Some sources said the Algerian demand was the result of stocking up ahead of Ramadan.
Combined with Algerian demand, Egypt had also increased its buying volumes in recent weeks, contributing to the overall strengthening of the market.
On the Mediterranean supply side, seasonal refinery maintenance also helped limit supply in the region.
Looking at Northwest European fundamentals, EBOB barges were supported by refinery maintenance, offsetting relative bearishness deriving from lack of spot-market arbitrage opportunities to the US Atlantic Coast and limited volumes heading for West Africa.
EBOB barges were assessed at $662/mt Monday, down from $664.25/mt Friday, while FOB Mediterranean gasoline cargoes were assessed at $659.50/mt, up from $657.50/mt.