Asia's naphtha rises to 2-1/2-week high

Asia's naphtha crack rose to a 2-1/2 week high on Thursday due to low oil prices but the intermonth spread was at its weakest since 2010 due to an oversupplied market.

The crack at a discount of $22.68 a tonne to Brent crude was at its highest since March 31. But intermonth spread was at a steep contango of $11 a tonne. A contango refers to the front-month price being lower than the following month.

A contango typically happens in an oversupplied market and the wider the contango, the weaker the fundamentals.

Taiwan's Formosa cancelled a purchase tender this week to buy naphtha for second-half May delivery due to sufficient domestic supplies.

South Korean LG Chem and Hyundai Oilbank as well as Chinese buyers were looking to buy naphtha, with LG Chem paying a discount of about $12 a tonne to Japan quotes on a cost-and-freight (C&F) basis.

Other buyers this week include Singapore's PCS, YNCC, GS Caltex and Lotte Chemical. Asia's gasoline crack was at a two-week high.