Naphtha gains in Asia but stuck in contango

20-Jul-17

Asia's naphtha crack peaked to a 25 day high of US$56.9/ton, supported by comparatively weak Brent crude which fell below US$49 a barrel, as per Reuters. But naphtha supplies were still in excess and this was reflected in the inter-month outright prices being in a 'contango' state, which started on July 6.
Contango usually refers to an oversupply market where the front-month price falls below that of the following month. The current Asian naphtha front-month price for H1- September naphtha is US$$1.50/ton lower than the value for H1-October.
Asia's naphtha glut, however, appeared to have eased versus last week, as fewer European cargoes are expected to arrive in Asia in September, with the current discount levels to Japan quotes for spot naphtha making it unattractive for sellers.