Europe naphtha nears $700/t on crude and demand

03 July 2007 15:31  [Source: ICIS news]

LONDON (ICIS news)--European open-spec naphtha reached almost $700/tonne on the back of stronger crude prices and heavy demand, traders said on Tuesday.

This latest spike peaked on Monday when bids and offers were heard in a wide range at $680-699/tonne, which according to one trader reflected a lack of direction in the market.

By Tuesday morning the range narrowed to $681-691/tonne, cost, insurance and freight (CIF) northwest Europe (NWE), reflecting a higher degree of consensus.

July crack spreads were talked at $5.00-5.15. August and September Brent crude oil futures were noted at $72.24 and $73.15 a barrel at the time.

Crude oil prices were upgraded on the back of expectations that US stocks were forecast to have fallen, ahead of Thursday’s IEA stock data.

One London based trader said part of the gains in naphtha could be attributed to higher crude prices. The other was simply a higher level of demand by petrochemical end-users and gasoline producers, he added.

The possibility of a gasoline arbitrage window from Europe to the US was still likely as the US heads towards the peak summer driving season which is marked by 4th July, Independence day.

This normally coincides with a rise in demand for gasoline in the US.

If the window opens then naphtha prices were likely to shoot up again, one source said.

Traders and brokers were not willing to make any form of forecast into the market, but the majority agreed it was likely to remain strong.

By: Kawai Wong
+44 20 8652 3214

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