US naphtha supplies drop on falling gasoline profits

15 November 2011 22:27  [Source: ICIS news]

HOUSTON (ICIS)--US Gulf heavy naphtha supplies thinned as refiners cut utilisation rates to pare possible losses from falling gasoline profits, said market traders on Tuesday.

As refinery throughput falls, so does naphtha production. Naphtha is the primary feedstock for reformate, a gasoline blendstock used to boost octane levels.

Low naphtha production at the refinery results in refiners buying naphtha from the spot market, increasing spot naphtha demand and strengthening naphtha spot trades, market sources said.

Naphtha differentials on Monday moved to a 0.5 cent/gal premium over US Gulf spot unleaded gasoline.

For the week of 4 November, the refinery average utilisation was 82.6% for the week of 4 November, the lowest since the spring, according to the US Energy Information Administration (EIA).

Naphtha was priced at $2.4875/gal on 14 November, compared with $2.7050/gal on 14 October. This was a drop of 8.1%.

Gasoline on 14 November for the US Gulf spot market was $2.4825/gal, compared with $2.8125 /gal on 14 October. This was a drop of 11.7%.

Refining profits from gasoline over West Texas Intermediate (WTI) crude fell to an 11-month low on Monday, dropping to $8.34/bbl. This was the lowest profit for gasoline since $8.08/bbl on 16 December 2010.

Gasoline futures settled at $2.5353/gal on Monday, while the settlement was $2.3043/gal on 16 December.

By: Sheena Martin
+1 713 525 2653

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