The East-West spread for naphtha, the differential between CFR Japan swaps and Northwest Europe swaps, plunged to the lowest in more than a month on Wednesday amid closed arbitrage opportunities with Asian prices dropping on poor demand.

The first-half July naphtha dropped by $18.50 to $569.50 a tonne and traded 50 cents cheaper than the following month. The profit margin on making naphtha rose to $18.40 per tonne over Brent crude.

June naphtha cargoes into Asia from Northwest Europe, the Mediterranean, the U.S. and Russia are expected to total around 1.1 million tonnes, down from 1.2 million tonnes in May, data from traders and Refinitiv Oil Research showed, mainly due to lower supplies from Europe.

Energy trader BP snapped up 25,000 tonnes of first-half August naphtha for a fifth straight session from Sietco at the Singapore window, market participants said.

Meanwhile, the gasoline crack rose to $11.52 a barrel over Brent crude on Wednesday as demand remained firm.

TENDERS

Indian Oil sought two cargoes of volumes 30,000 tonnes and 35,000 tonnes of gasoline for delivery during mid-June in a tender that closes on Wednesday, market participants said.

INVENTORIES

Light distillate stocks at the Fujairah commercial hub rose by 324,000 barrels to 7.291 million barrels in the week to May 19, data from S&P Global Commodity Insights showed.

NEWS

– Oil prices fell on Wednesday on a stronger U.S. dollar and as weak data from top oil importer China raised demand fears.

– China’s manufacturing activity contracted faster than expected in May on weakening demand, an official factory survey showed, heaping pressure on policymakers to shore up the patchy economic recovery.

SINGAPORE CASH DEALS

One naphtha trade, one gasoline deal.
Source: Reuters