Bearish sentiment persists in naphtha, but signs of arbitrage support emerge

Commentary summary:

• Naphtha cracks and timespreads continued to weaken, extending the downward trend that began in early May.

• MED-to-Asia arb margins are recovering, with some margins rebounding $10/mt in the past week, though still negative for 2H June deliveries.

• The USGC-to-Europe C5 arbitrage remains open, supported by low US premiums and tight European supply.

• Overall, the market remains bearish in tone, but improved arb economics for July could offer near-term support.

Naphtha markets continued to decline over the week, although the downward trend that began in early May showed signs of easing.

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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