The narrowing of the price spread between gasoline and naphtha in Northwest Europe follows gains in the September naphtha crack spread, as per Platts. The gasoline-naphtha spread was assessed at US$52 on Monday and US$46/mt on Tuesday, falling from US$16/mt recorded on last Wednesday. Naphtha values have strengthened this week amid higher gasoline blending demand, as good arbitrage economics for shipments from Northwest Europe to the US and West Africa encouraged traders to make gasoline for export.
Naphtha is a key feedstock used in gasoline blending. When the price of naphtha becomes more expensive relative to gasoline, blending margins for the road fuel typically narrow. The gasoline-naphtha spread narrowed following gains in the front-month naphtha crack spread, the relative value of the product to crude. The front-month naphtha crack spread is currently trading at minus US$6.05/barrel to ICE Brent, from almost minus US$6.50/b on Monday. In contrast, the September gasoline crack spread is trading at plus US$6.80/barrel, down by 40 cents/barrel from Tuesday's assessment.