22 February 2011 12:57 [Source: ICIS news]
The effects of the soaring price of crude oil overrode the influence of a weaker crack spread to take the naphtha cargo range to $904-912/tonne CIF (cost, insurance and freight) NWE (northwest Europe).
This was an increase of $21/tonne from the previous afternoon.
Brent crude oil prices have soared due to fears that the intensifying political unrest in Libya will disrupt oil supplies.
The resulting naphtha price hikes have led to some degree of concern in the oversupplied European naphtha market.
“This will affect demand,” a trader said.
The European naphtha market has been oversupplied for several weeks. One of the reasons for the abundance of material is petrochemical buyers’ preference for the rival feedstocks propane and butane, as their prices were below those of naphtha.
“Propane will look good,” a source added, referring to the price gap widening between naphtha and propane.
The crack spread had weakened from the previous afternoon to help counteract the crude-driven naphtha price increase.
The spread was at minus $5.90/bbl on Tuesday morning, compared with minus $5.65/bbl on the previous afternoon.
The softer spread had not been sufficient to stop naphtha prices soaring. Therefore it would likely have to weaken further.
“The crack will have to go down, possibly into double digits,” a source said.
At 12:15 GMT on Tuesday, April Brent was trading at $106.89/bbl.
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