The spread between August and September naphtha swaps in the over-the-counter-market in Europe has flipped into backwardation as naphtha cracks continue to rebound, as per Platts. The August naphtha crack swap was pegged at around minus US$1.50/barrel Thursday morning, rising from minus US$3.75/bbl a week ago. Cracks have risen steadily through the week, rebounding from the lows seen at the start of August of around minus US$5/bbl.
The rise in cracks follows reduced production of naphtha on reduced run rates due to poor refinery margins. Strength in the Asian naphtha markets has had a knock-on effect on European naphtha values, as the arbitrage to Asia for naphtha has started to open in recent days.