About 300,000 tons of Mideast, Suez naphtha is on an unusual journey towards the West. This reversal of a usual Eastward journey to Northwest Europe and the United States will help to improve weakening sentiments in Asia. As per Reuters, the 300,000 tons of Middle Eastern and Suez naphtha cargoes have either been fixed, or provisionally booked for a rare move to the West to help ease the high stockpiles in Asia, improve the market sentiment weakened by weak demand and has driven up naphtha cracks to their highest in over two weeks.
Asia, which is structurally short in supplies, has traditionally looked to Europe, the Mediterranean and the United States to meet its supply shortage. But currently, since Asian markets have no appetite for the cargoes, they are moving West despite weak prices there as well, as they are more lucrative than values in Asia.
The Asian market plunged at the start of the month after Middle Eastern suppliers Saudi Aramco, Kuwait Petroleum Corp (KPC), Abu Dhabi National Oil Co (ADNOC), ADGAS, and Qatar's Tasweeq, released abundant spot cargoes after they failed to get term buyers to renew their contracts. About 1 mln tons have been offered or sold for July-August loading from the Middle East.
Cracks were continuously being weighed down, hovering at below US$60/ton premium between July 12 and July 20. But cracks have surged by over ten dollars, on news of parcels moving West.