01 August 2012 13:01 [Source: ICIS news]
LONDON (ICIS)--The European naphtha crack spread has firmed as a result of the Asian market strengthening, sources said on Wednesday.
“It’s minus $8.90/bbl, as strong as goat's breath,” a trader said at around 10:00 GMT, referring to the September naphtha crack spread.
At the same time, the August naphtha crack spread stood at minus $9.55/bbl, having strengthened from minus $10.55/bbl at 15:30 GMT on 31 July.
“It’s [due to] the strong eastern market, strong mogas [motor gasoline], but I think it's [the strengthening of the crack spread] overdone,” the source added.
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At the close of Asian trade on Wednesday, the Asian naphtha crack spread against September Brent was at $80.20/bbl.
With the European naphtha market structurally long, it has become increasingly dependant on arbitrage opportunities to
The last two to three weeks have seen a wave of bookings for the east. Towards the end of last week, it was thought that 400,000-500,000 tonnes of European naphtha had been booked for August delivery in
However, the strengthening of the European crack spread on Wednesday morning appears to stem from speculation of further opportunities to move material east, rather than any new fixtures.
“Nothing new, no,” a second trader said when asked whether any further vessels have been booked for
For August prices, the east-west spread currently stands at around $18/tonne. Theoretically, and depending on various factors such as freight rates, this should make an arbitrage to
The first trader agreed this is indeed the case. However, with such significant volumes already booked for the east, it is questionable as to how much more European naphtha
($1 = €0.81)
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