Calm in ARAG as Gasoil Rips Through Resistance

The ARAG window was notably subdued today, even as underlying energy markets surged ahead. ICE gasoil broke above its 200-day weighted moving average to reach $783/mt, a level not seen since early Q1. The move comes as geopolitical risks mount across several key trade corridors, sparking increased distillate buying and triggering technical momentum. The market’s response has been sharp: the BOGO spread dropped to +423, reflecting stronger distillate pricing relative to soft oils.

Gasoil

On the feedstock front, soybean oil futures are holding firm above their long-term averages. Despite a modest pullback late in the session, CBOT July futures remain near 54.77 c/lb. However, it's worth noting that CME and other U.S. exchanges were closed today in observance of Juneteenth, which may have dampened liquidity and temporarily paused price discovery. South American FOB markets, especially Paranaguá, continue to show weakness. Offers on August shipments remain soft, with little sign of recovery despite firmness in gasoil and competing vegetable oils.

Soybean Oil

In Europe, the biodiesel complex was mixed. RME saw its gross margin retreat to $167/mt as rising soft oil prices outpaced modest gains in gasoil. Physical trades settled around $1,431/mt FOB ARA, reflecting slightly weaker economics despite relatively stable underlying demand. FAME 0 remained largely unchanged at a $660/t premium, offering a gross margin in the $54–60/mt range. UCOME, by contrast, was actively traded and clearly in demand. Offers around $1,480/mt translated into robust gross margins well over $180/mt, making it the most resilient player in today’s biofuels complex. With UCO feedstock prices holding firm in Europe and premiums rising again in Asia, the UCOME value chain continues to justify its premium.

On the U.S. policy front, there’s little to report. D4 RINs have found a short-term equilibrium around 1.18, pausing after recent strength linked to RVO revisions. As Congress weighs further SAF and renewable diesel subsidy alignment, market participants remain cautious about what’s next for cross-border trade in waste-based feedstocks and the fate of imported molecules under the proposed equivalence adjustments.

While today's window lacked fireworks, the broader picture suggests that distillate markets are leading the charge—with biofuels moving reactively but firmly, especially in premium segments like UCOME.