Temporary support to fade but Arbs East provide a floor

Commentary summary:

• Temporary Med and NWE naphtha strength on Organic Chloride issues likely to fade, but arbs to the East are shut at current levels

• E/W can rise further to help overcome higher fob and freight in the Med, but paper upside might be short-lived if cash diffs do most of the work

• Arbs into Rotterdam out of the Med are only borderline workable thanks to a $3/mt correction in the Med/North that has brought that spread back into its recent average territory

• Meanwhile, arbs out of Houston remain tightly shut on strong FOB values. The resumption of Venezuelan crude flows is likely helping to tighten up the USGC naphtha balance slightly as well.

• Gasoline cracks have been increasing steadily through August with naphtha largely following. As gasoline runs out of steam moving into September, so too will naphtha markets as temporary logistical issues are worked out

Philip Jones-Lux is Senior Analyst for Sparta. Having worked with organisations such as JBC Energy and RP Global, Philip is a seasoned energy market analyst with expertise across the oil barrel and power markets

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