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Northwest European naphtha cracks rise to 6-week high on balanced supply, lower crude

http://www.chemnet.com   Jul 29,2015 Platts
The CIF Northwest Europe front-month naphtha crack swap strengthened to a six-week high of minus $2.90/barrel Monday, up from minus $3.65/b at market close Friday, reflecting the slump in crude futures to a four-month low.

The last time the CIF NWE front-month naphtha crack was assessed higher was at minus $2.85/b on June 11.

Alongside that, the front-month/second-month structure flipped from a 50 cents/mt contango to a 50 cents/mt backwardation Monday, the steepest backwardation in a month.

According to trading sources, sentiment in the NWE naphtha market was supported Monday by a small increase in buying interest against a backdrop of balanced open-spec supply and healthy light virgin naphtha availability.

"The flat price is pretty much unchanged... I hear some small buying interest," a trader said.

The CIF NWE naphtha cargo value gained 75 cents/mt to be assessed at $457.75/mt Monday, which represented a $3/mt premium over the August swap, up from a $2.25/mt premium Friday.

"I think [the open spec market] is reasonably well balanced to almost tight," an end-user said, adding that LVN on the other hand was still well supplied.

Another source said: "In Europe, the prompt has cleared."

Some traders said there was less LVN around as one oil major that was offering cargoes of this particular blending grade the previous week had ended up taking the material into its own system.

"[The company] pulled all LVN offers... premiums are moving higher," a trader said. "I heard [a company] took three of its own LVN cargoes internally, making the LVN market a bit tighter," another trader said.

At noon London time Tuesday, the August CIF NWE naphtha crack was heard trading at minus $2.80/b.
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