Europe naphtha values surge on firm crack spread

22 May 2008 12:54  [Source: ICIS news]

LONDON (ICIS news)--European open spec naphtha surged to a range of $1,080-1,085/tonne (€680-684/tonne) on Thursday with the June crack spread remaining steady and crude oil hit values around $135/bbl, traders said on Thursday.

 

Traders reported a crack spread at -$12.80/bbl to -$12.60/bbl, similar to Wednesday’s quote at -$12.80/bbl to -$12.30/bbl.

 

Refined products were now catching up with crude oil and the market was now clearly in a contango, traders said.

 

Driving this latest surge in crude oil futures was an unexpected 5.4 million bbl decrease in US crude stocks. Market analysts originally forecast a modest gain by around 600,000 bbl.

 

Brokers added that despite naphtha surging significantly this week, the market was still underpinned by a weak physical market with a lack of support.

 

The gasoline sector, which is key to supporting the naphtha market, remained abundantly supplied on both sides of the Atlantic.

 

With high stocks in the US and Europe, there will be less production and therefore less demand for naphtha.

 

A gasoline broker reported the June gasoline crack spread around $1.80/bbl relative to Brent crude. Although this was in positive territory, the broker noted that values one year ago pre-summer driving season was around $20-26/bbl.

 

There was also less supprt from Asia as the Europe and Mediterranean arbitrage window was blocked.

 

Traders claimed that the $35-40/bbl spread in regional values made the arbitrage window viable on paper, but shipowners were reluctant to send vessels east and return empty.

 

($1 = €0.63)

 

To discuss issues facing the chemical industry go to ICIS connect

By: Kawai Wong
+44 20 8652 3214

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly