Corrected: Record crude levels drive up naphtha market

21 September 2007 12:20  [Source: ICIS news]

Correction: In the ICIS news story headlined "Record crude levels drive up naphtha market" dated 21 September, 2007, please read in the sixth paragraph ...up to four long range carriers (LR2) were... instead of ...up to four very large crude carriers (VLCC) were... A corrected story follows.

 

LONDON (ICIS news)--Record high crude values for both West Texas Intermediate (WTI) and Brent, combined with good demand, was driving the naphtha market to record high levels, traders said.

 

An October crack spread was quoted at $2.50/bbl to Brent on Friday.

 

Brent crude futures were at $78.81/bbl, roughly translating to outright prices over $720/tonne CIF (cost, insurance & freight) NWE (northwest Europe) for European open spec naphtha.

 

Brent set a new record high at $79.28/bbl, whilst WTI set another new record high at $84.10/bbl on 20 September.

 

One Norwegian-based naphtha trader said there was all round support for the naphtha market with gasoline and petrochemical support, which had helped push the market up.

 

He added that on top of these factors, up to four long range carriers (LR2) were fixed from the Mediterranean and Africa to the US this week.

 

According to a European based naphtha trader, the market was inflated due to consistently high crude values. He noted, however, that these record high levels were not sustainable.

 

He added that there were a number of factors driving the crude oil market at present, including a tropical storm over the Gulf of Mexico, which is a short term phenomenon.

 

Falling crude stock levels in the US could alleviate shortly since OPEC announced that crude oil output will increase from 1 November.

 

One London based naphtha trader agreed that current levels were not sustainable and that once the market eases, naphtha would follow.

By: Kawai Wong
+44 20 8652 3214

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