Asia's naphtha crack slipped 1.1% to a 5 session low of US$138.8/ton on the last day of the previous year due to the year-end lull, but the crack value was more than four times the value seen a year ago. The overall 2015 average crack however ended at US$92.43 vs 2014's average of nearly US$120/ton. This year therefore also marked the lowest yearly average since 2009 as a sluggish start in January 2015 and massive supplies arriving from the West in the third quarter had dragged on the crack.
Despite the low crack level, naphtha's performance has surpassed some of the traders' expectations this year as they had previously anticipated large amount of alternative liquefied petroleum (LPG) gas feedstock replacing the fossil fuel. LPG, also used for heating, can replace 5 to 15 percent of naphtha in some of the Asian crackers. But high prices of LPG for most of this year have prompted buyers to rely mostly on naphtha.
Some traders had also expected Abu Dhabi National Oil Co (ADNOC) to sharply raise exports as it had more than doubled its Ruwais refinery capacity to over 800,000 bpd. But technical problems had delayed high runs at the refinery. "It has been a good year for naphtha although gasoline is the best (among all oil products)," said a Singapore-based trader. "I expect a strong light distillates products market in 2016," he said, adding that the strength would be from gasoline. "Low flat gasoline prices will drive demand for motor fuel," he said.
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