18 February 2011 15:48 [Source: ICIS news]
A level this low has not been seen for seven months.
“July 2010 was the last time it was that weak”, one participant said.
The crack spread fell into negative territory just over a month ago, and has softened further since then.
On 18 February, the crack spread was at minus $6.18/bbl. On the 18 January it was minus $3.30/bbl.
Fears that political unrest in the ?xml:namespace>
Naphtha prices consequently remained high, but would likely have risen further still if not for the weakening crack spread.
It was hoped that the soft spread would encourage further material to leave
“The market has been oversupplied for over two months now,” a source said. “It’s partly due to petchem buyers favouring LPG as it’s cheaper than naphtha, and partly due to the gasoline sector not pulling."
Recent poor margins between gasoline and naphtha had not made it financially viable for buyers from the gasoline sector to purchase naphtha.
However, this further weakening of the crack spread had so far failed to trigger the departure of material to
This was likely due to a combination of factors. High naphtha prices and inflated transport costs, due to both rising fuel costs and increased insurance premiums brought about by a heightened risk of piracy, ensured that little if any profit could be made by sending material to
Furthermore, the Asian turnaround season was now underway, further dampening demand from the east.
On Friday lunchtime the naphtha cargo range was assessed at $860-868/tonne ($636-642/tonne) CIF (cost, insurance, freight). At 14.30 GMT, April Brent was trading at $101.23/bbl.
($1 = €0.74)
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