Naphtha Falls to Multi Week Low on European Oversupply and Weak Blending

European Surplus Weighs

The end of the summer driving season has left European markets awash in naphtha. With low seasonal demand from gasoline blenders and reduced cracker run rates due to high energy costs, this surplus is creating a drag on the global price, even as Asian demand remains functional.

LPG Substitution Risk

Naphtha faces stiff competition from cheaper alternative feedstocks, specifically LPG (propane and butane). Petrochemical crackers with the flexibility to switch inputs are favoring the lower-priced gas feedstock, reducing the overall market share and demand for naphtha.

Crude Correlation

As a crude oil derivative, Naphtha is tracking the bearish movement in the WTI and Brent benchmarks. Analysts expect prices to remain subdued until the global oil market stabilizes or until Asian demand for petrochemicals requires significantly higher volumes.