Naphtha-Gasoline crack at 27 month lows in Europe

21-Mar-11

Naphtha-Gasoline cracks have dipped to 27 month lows on Thursday as rising prices were outpaced by rallying oil markets, as per Reuters. Volatile crude prices helped drive gasoline prices higher during the session, after a rocky start. Ultimately, weak demand balanced jumpy crude prices, which gained US$4/bbl on concerns that the conflict in Libya could escalate and unrest in the Middle East disrupt supplies. Since Japan is one of the largest importers of naphtha, its catastrophe has pressured light-end refining margins as traders speculate Eastern demand for the products will fall. In contrast, middle distillate products estimated to replace lost nuclear power in Japan have jumped, with gasoil crack spreads rising to 26 months highs earlier this week. Gasoline inventories fell back from over 1 mln tons last week, the highest level in 2011 to date, but stockpiles remained higher on the year as summer grade gasoline inventories were replenished. Naphtha supplies fell to 34,000 tons, down from 50,000 tons last week, with draws from the petrochemical industry and the gasoline pool, while imports arrived from France. Naphtha market was around higher by US$40/ton amid bids discussed at US$918-$925/ton CIF NEW. US demand has helped support naphtha prices.