Asia's naphtha fell from a 32 month high on Friday, while cracks were firm at about a month's high on strong sentiment due to short covering in the East and healthy demand in the West, as per Reuters. Market strength was reflected in Kuwait Petroleum's sale, where it fetched premiums in the high US$20s a ton to Middle East quotes on a free-on-board (FOB) basis for 74,000 tons loading on May 22-29. This was the highest premium it had fetched in about 10 months.
The current strength in the East may pull back some of the barrels that were initially meant to be shipped to the West. Since refiners in Europe are operating at low run rates to protect margins, they could limit naphtha exports to Asia ahead. Gasoline cracks hovered near a two-week high but reforming margins fell to their lowest in about three weeks, signaling that it was more lucrative for refiners to sell naphtha compared to gasoline. Naphtha cracks rose by over a dollar to US$142.85/ton premium. Naphtha for H1-June fell by ten dollars to US$1056.50/ton.