Europe naphtha crack up 25% as Brent crude falls below $100/bbl

24 June 2013 16:51  [Source: ICIS news]

LONDON (ICIS)--The European naphtha crack spread has strengthened by 25% in four working days on falling ICE Brent crude oil futures, industry sources said on Monday.

"[The crack has fallen] only because of the collapsing crude... and because Asia loves low flat prices," a naphtha trader said.

On Monday, August ICE Brent crude oil futures had traded at a day's low of $99.67/bbl as of 16:00 GMT, down sharply from $106.08/bbl at 16:30 GMT on Wednesday last week.

Due to the crude oil price decrease, the July naphtha crack spread slipped to minus $7.55/bbl on Monday from minus $10.05/bbl on Wednesday last week.

The naphtha crack spread is the price difference between crude oil and naphtha, calculated in US dollars per barrel. The crack spread tends to move inversely to crude oil prices.

A strong crack spread - if sustained - could lead to better naphtha margins for refiners and in turn to increased run rates.

On Monday evening, naphtha cargoes traded similar to last Friday's close in the $820s/tonne CIF (cost, insurance and freight) NWE (northwest Europe).

The main application of naphtha is in the petrochemical production of olefins. It is also used as a feedstock for gasoline blending.

($1 = €0.76)

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By: Cuckoo James
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