Closed arbitrage from Mediterranean to Asia tank NWE naphtha cracks, backwardation

Northwest Europe naphtha cracks and the balance-month, front-month backwardation have touched new lows as the arbitrage from the Mediterranean to Asia is now closed, as per Platts. The arbitrage opportunity, which opened in mid-February due to a naphtha shortfall in Asia, started to diminish last week, shutting out new participants. On Tuesday's close, the CIF NWE front month naphtha crack swap fell to -US$6/barrel, the lowest since January 17, while the March to April backwardation narrowed to US$12/mt, a two-month low. In European morning trade Wednesday, the March to April backwardation was heard narrowing further to US$11/mt, traders said, while the front month crack was trading at -US$5.70/b. The current lack of flows to Asia is causing tightness of supply both in the Med and NWE to ease. Lighter, open spec naphtha is attracting premiums of mid to low teens over Mean of Platts Japan. This compares with high teens heard since mid-February when Asian demand was booming.
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