Europe crack spreads improve on Gustav threat

29 August 2008 17:40  [Source: ICIS news]

LONDON (ICIS news)--Europe naphtha crack speads hit -$5.75/bbl on a boost by the threat from Hurricane Gustav, with the possibility of further dramatic gains, traders said on Friday.

Improving refinery margins, possibly driven both by crude oil’s recent $20/bbl drop and the onset of the winter gasoline season, had already driven values up to -$6.30/bbl on 14 August from -$14.15/bbl a month earlier.

But the threat to Gulf of Mexico crude oil production and refining was seen as a major reason behind the value hitting -$5.75/bbl on Wednesday – the highest since 4 April, when the value stood at -$5.60/bbl.

On Wednesday the first spot deal in over a month was heard at $988/tonne (€672/tonne). The spot market had been very quiet for some weeks, with very little activity reported.

Although values fell back to -$7/bbl on Friday, traders were expecting continuing improvement throughout next week.

“[The hurricane] did very much already have a positive effect on crack values,” said one.

Another added: “Depending on the effects of Gustav, I think we will see naphtha activity speeding up early next week.”

($1 = €0.68)

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By: Alex Davis
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