In June, crude oil prices surged from $78.36 per barrel at the start of the month, to over $86.40 by the end of last week. However, questions remain about the stability of this rally, influenced by various factors such as uncertainties in demand from major consuming regions like China, where refinery runs have been consistently revised downward. (Source: CitiGroup)

The usual factors that boost the oil market in summer, such as strong gasoline demand, have also not performed as expected. In the U.S., the seasonal increase in gasoline demand has slowed down, and inventories remain robust according to weekly data from the DOE. Nonetheless, rising tensions in Russia and the Middle East could still drive prices higher.

The increase in crude oil prices has had an expected knock-on effect on refined products prices. In particular, the strength of Naphtha and LPGs has negatively impacted petrochemical margins, with producers in Europe and Asia seeing their cash margins diminish due to the surge in feedstock prices in June. Naphtha spot prices have risen in both regions, driven by the increase in crude oil prices.

The LPGs market also reported gains, with Propane spot prices increasing by 7% in Europe and 6% in the U.S. over the month.

This increase has been propelled by resilient petrochemical demand, as LPGs remain the preferred feedstock for petrochemical producers, despite the market’s seasonal tendency to soften in summer. (Source: BNEF)

In contrast, U.S. petrochemical producers are performing better since spot prices for U.S. ethane, another feedstock, have decreased, resulting in healthier margins.

The chart below, created using TraditionData’s end-of-day price marks, illustrates the Naphtha N.W.E Forward Curve as of last Friday compared to the beginning of the month.

At TraditionData, we provide comprehensive coverage of light ends and petrochemical pricing. With a recent update and enhancement of our Petrochemical package, we now offer our customers an even more valuable dataset to inform their business decisions.Get in touch to find out more about our comprehensive data coverage for Crude and Refining products.

Pump jack silhouette against a sunset sky with deliberate lens flare and copy space. These jacks can extract between 5 to 40 litres of crude oil and water emulsion at each stroke.
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