E/W strength dominates a stable naphtha market

Commentary summary:

• The E/W spread continues its persistent rally, reaching the $40/mt mark for Dec/Jan.

• Despite softer Asian cash differentials, LR2s to Asia remain the most competitive MED option.

• Gasoline correction spreads into the gas-nap market, pressuring European blending margins.

• Structural LPG shifts, boosted by rising USGC supply, could pressure naphtha from Q2 onward.

The naphtha market continues to show moderate volatility during the current month, at least compared with the volatility seen in previous months, especially October.

With no major changes in flat prices, timespreads, or cracks, the most active indicator remains the E/W, which continues its unstoppable upward trend since the beginning of the year, already reaching $40/mt for the Dec/Jan contract.

Jorge Molinero is Commodity Owner for Gasoline 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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