Spread between naphtha and propane balloons wider again in Europe

Quantum Commodity Intelligence - European naphtha prices and cracks surged higher again Friday amid depleting stock levels to match the earlier rally in Japan, while the propane bubble continued to burst.

Cracks for August paper for CIF cargoes in northwest Europe gained $0.42/b and went into positive territory to +$0.38/b, according to Quantum data.

This followed a rise of $0.40/b in the crack value of August paper for CIF Japan cargoes at the time of the Singapore close to +$1.76/b.

Stocks for naphtha have been drawing lower in Europe, sources said, citing Euroilstock data.

Inventories in 16 major European countries showed naphtha stocks dropped 30.45 million barrels in June, down 1.14 million barrels of 3.6% from May.

Cargo prices for naphtha in northwest Europe were assessed $24/mt ($2.69/b) higher Friday amid a rally in September Brent that was up $2.15/b by 1630 London time from Thursday.

But propane cargo prices in northwest Europe only gained $4.25/mt ($0.33/b), and its value below naphtha dumped $19.75/mt to -$57.25/mt.

The spread had narrowed to just -$14/mt on Monday from -$65.25/mt on June 29.

Global propane prices rallied amid concerns US stock levels were low for this time of year and that inventories were building too slowly towards October when they usually peak ahead of the winter.

Saudi Aramco hiked its official monthly selling price of liquefied gas (LPG) for a second straight month for July, raising propane to $620/mt, up $90/mt on the month and August butane to $620/mt, up $95/mt from July.

But with global refining capacity still subdued, the propane spread below naphtha in Europe has collapsed back Thursday and Friday to levels seen in June.