Europe naphtha prices up 10% from July on crude, strong crack spread’

30 August 2013 13:37 Source:ICIS News

LONDON (ICIS)--Northwest European naphtha prices have risen by $83/tonne, or 10% month on month, mostly on the back of firmer upstream crude oil prices, but also on a bullish sentiment within the sector, industry sources said on Friday.

ICE Brent crude oil futures rose from $106.88/bbl (15:30 GMT) on 30 July to $114.97/bbl on 30 August (10:40 GMT).

DATE 

30 JULY 2013 

30 AUGUST 2013 

PRICE

$869-873/tonne

 $952-956/tonne

Naphtha CIF (cost, insurance & freight) NWE (northwest Europe) prices

Sentiment within the naphtha sector turned bullish on the back of a refinery maintenance season due to begin in September, and a shutdown at a key Algerian refinery, which is expected to result in less naphtha supply into Europe.

As a result, the crack spread - a good indication of the strength in the naphtha market - stayed in the minus $6.00s/bbl for the most part of the month, stronger than in July.

However, naphtha demand is mostly unchanged from last month. There is reasonably good demand from the domestic petrochemical sector, despite competition from the alternative feedstock liquefied petroleum gas (LPG).

Gasoline blending demand from the US continues to be unexceptional. Meanwhile, the arbitrage window to Asia remains shut for the fourth week in a row, with the price spread between the two regions narrowing to $8-9/tonne from $12/tonne last Thursday.

Northwest European naphtha is used as a blendstock in gasoline stocks exported to the US, and as a petrochemical feedstock.

($1 = €0.76)

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By Cuckoo James