The CIF Northwest Europe naphtha market moved into contango Wednesday for the first time since December due to a supply glut in Europe, sources said.
On the European close Wednesday, the May-June naphtha spread fell $3.50/mt on the day to minus $0.25/mt, Platts data show.
The last time the balance-month, front-month spread was seen in contango was early December.
Sources said the market is facing an overhang of supply, with the petrochemical sector focusing on cheaper feedstock propane and refineries coming back online.
In addition, the arbitrage to the US remains closed, even in the runup to the summer driving season, while the arbitrage to Asia represents too slim a profit yield to attract large volumes, traders said.
"There is more than enough naphtha around," a petrochemical source said.
This abundance of supply was reflected in falling premiums. On Wednesday's close, the CIF NWE physical benchmark premium to the May swap fell on the day from flat to minus $2/mt, Platts data show.
