NWE naphtha cargo flat price nears 5 month high amid rising crude

02-May-16

The flat price for CIF NWE naphtha cargoes reached a near five-month high on the back of a strengthening crude complex on Thursday, while physical fundamentals in the naphtha market remained stable, as per Platts. CIF NWE naphtha cargoes were assessed at a near five-month high of US$404.25/mt Thursday, up US$9.25/mt on the day. The last time European naphtha was assessed higher was December 3 last year when it stood at US$408.75/mt, Platts data showed. This increase in the flat price is due to a surge in front-month ICE Brent futures, which at 16:30 London time Thursday stood at a near six-month high of US$47.58/b, up US$1.50/b from the previous day. The last time front-month ICE Brent futures were assessed higher was November 5, 2015 when they stood at US$48.44/mt, Platts market data showed. Meanwhile, fundamentals in the European naphtha complex did not point at a stronger market. A weaker Asian naphtha market continued to weigh on European market sentiment as the spot arbitrage east remained difficult to work. "We're not seeing anything being fixed from the Med to go east," a Europe-based trader said Thursday. Looking at local demand outlets for structurally long European naphtha, support from gasoline blenders in Europe was visible Thursday, yet not as pronounced as at the beginning of the month. While incremental buying interest from olefin producers was supporting the market, market sources pointed to a likely switch in European cracker feedstock on the back of cheaper propane and attractive downstream ethylene margins. The utilization of more LPG over naphtha could lengthen European naphtha in May, market sources have previously said.