Arb to Asia shapes Q4 outlook, still supported despite high seasonal levels

• Naphtha cracks have performed the best in the barrel since Q2, and the market is expected to remain tight despite higher runs for the end of the year.
• Improved economics for arbitrage to Asia, supported by higher physical premiums in Asia, lower ones in NWE and wider E/W.
• Arbitrage from NWE to NYH remains open for blending naphthas, though incentives have slightly decreased on a narrower RBOB/nap.
• Lower TC6 rates have stimulated intra-European arbitrage, pushing physical premiums in NWE down while MED premiums rise on stronger demand from Asia.

The naphtha market continues to show high volatility in both cracks and spreads, with MOPJ close to positive crack values and the strengthening of its forward curve in timespreads, helping to stimulate the arbitrage perspective from the West, supporting the entire OSN complex in the short term.

Jorge Molinero is a Commodity Owner at Sparta. Starting his career as a financial analyst with BBVA, Jorge quickly transitioned to market intelligence within the energy sector, spending 4 years as a naphtha analyst with Repsol before joining Sparta in early 2023.

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