Europe naphtha cracks improve on US output threat

09 September 2008 13:11  [Source: ICIS news]

LONDON (ICIS news)--Crack values for European naphtha hit a six-month high, with paper trades heard at -$4.30/bbl on the back of fears of hurricane damage to Gulf of Mexico oil facilities hitting gasoline production, traders said on Tuesday.

Crack spreads had pushed back up to -$4.40/bbl on Monday on the threat of Hurricane Ike as energy companies delayed restarting oil and gas production in the region, which yields about 25% of US crude oil.

With Gulf facilities remaining off line and the hurricane season expected to continue until November, an arbitrage window could open to the US for naphtha to be used in gasoline blending.

Traders remained uncertain whether this would revive the quiet Europe naphtha spot market.

"I think we first have to see what will happen with Ike," said one trader. "We will have to wait one or two weeks at least, because there are many other factors."

"For instance, LPG is still cheaper, while US demand for gasoline is lower than last year," he added.

After Hurricane Gustav left Gulf oil and gas infrastructure relatively unscathed, naphtha crack values reached -$5.45/bbl last Wednesday.

To discuss issues facing the chemical industry go to ICIS connect

By: Alex Davis
+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