Naphtha Markets Summary
This past fortnight has seen naphtha in Asia and Europe rally into May before finally reaching a plateau in the past week as the rally ran out of steam. Naphtha cracks have reversed from their downtrend seen in the first half of April, with the May NWE crack returning above -$10/bbl.
Strength in the naphtha complex has been a supply tightness story, with a tighter components market in Europe and fewer exports out of the AG. ADNOC’s crude flexibility project in its Ruwais refinery led to temporary tightness in light sweet grades, as more naphthenic crudes like Murban are being exported instead.
However, this strength was focused in the physical as the May/Jun NWE crack roll blew out and the Jun crack saw resistance at -$10/bbl.
The rally seems to have reached an apex has spreads in both regions have begun their downtrend, notably Jun/Jul NWE down from $10/mt to $7/mt.
The East/West has rebounded from lows of $13/mt in June, with Jun/Jul box out of contango.
