Can the current rally last? European naphtha timespreads surge to yearly highs

Commentary summary:

• Key support came from MED-NWE arbitrage reopening mid-July, marking a clear signal for the rebound.

• MOPJ has failed to break above July highs in timespreads, despite strong Chinese imports in June.

• Asian August naphtha cracks hit year-to-date lows, and cash diffs turned negative last week, limiting the potential upside at this point.

• Export opportunities for Europe to Asia have faded amid weaker E/W and sales prices, while the threat of USGC to EU arrivals grows.

Nap NWE timespreads rallied over the past ten days, with the Aug/Sept spread moving from flattening the contango to gaining $7/mt, reaching the highest values of the year for this timespread.

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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