Spot naphtha premiums in Northwest Europe firmed more than $5/mt last week, supported by a dearth of prompt cargoes stemming from recent demand into the gasoline blending pool, sources said Monday.
The premium for spot naphtha cargoes CIF NWE over front-month swaps closed last Friday at $7.75/mt, up from $2.25/mt at the start of the week, according to Platts data.
The prompt backwardation between July and August swaps contracts also widened out to $3.50/mt on Friday from $1/mt earlier in the week.
Light ends traders said strength in global gasoline markets was supporting naphtha premiums, even though propane's wide discount to naphtha -- at more than $120/mt at the end of last week -- means that petrochemicals producers are favoring propane as a feedstock.
Demand from West Africa has pulled naphtha into the gasoline blending pool, traders said. This pull from Nigeria, estimated at up to 70,000 mt in recent days, has lifted gasoline values in Europe, sources said.
West Africa typically imports 90/91 RON gasoline, a naphtha-rich blend. Gasoline refining margins have also improved into this month, with the front-month gasoline crack rising to plus $8.6/barrel Friday, up from plus $7.4/b on July 1, according to Platts data.
Morgan Stanley was actively seeking naphtha cargoes last week for gasoline blending, offering $7.75/mt over the August swap on Friday at $992/mt for July 27-31 dates during the Platts Market on Close assessment process.
"There are not as many components around," said one naphtha trader on Monday.
