The contango in Asia's naphtha intermonth spread between second-half January and second-half February deepened by half to $1 on Monday while the crack value fell for the third straight session to reach its lowest in five weeks at $60.63 a tonne. The crude rally and ample naphtha supplies were hurting the sellers' sentiment, traders said, and the weak market could persist throughout January next year.
Contango refers to a weak prompt market while backwardation reflects strong fundamentals. "Cargoes arriving in Asia next month from the West are building up and that is depressing the market. The high crude oil price is also not helping the market," said a Singapore-based trader. The amount of naphtha arriving from the West, which includes Europe and the Mediterranean, this month was estimated to reach some 1.2 million tonnes, almost double the amount from November.
Comments
Comments are closed for this article.