Uncertainty over gasoline basis plunges naphtha to 14 month low

22-Sep-14

In the middle of the previous week, spot price of naphtha fell to a 14-month low on the back of a Valero sale to ATMI, as per Platts. Valero agreed to sell 50,000 barrels of full-range naphtha at waterborne conventional gasoline minus 24.5 cents/gal for Houston delivery September 23-October 3, and it was assessed there. Valero retained the right to dictate a three-day period within that period for delivery. The naphtha differential dipped from gasoline minus 15.75 cents/gal on Wednesday he spot price fell 14.58 cents/gal to US$2.3631/gal for a low since the assessment of US$2.3581/gal on July 1, 2013. Naphtha lost footing in June 2013 on the presence of South American cargoes on offer. Since July 1, 2013, full-range naphtha has dipped below US$2.40/gal only on nine trading days, five of which have come this month. A drop in Gulf Coast conventional gasoline kept many market players on the sidelines, trade sources said. "Not seeing a lot of bids, and not seeing a lot of offers, either," a second products trader said. "I think everyone is pretty much shellshocked by yesterday's moves on the M [conventional gasoline]."