Asian naphtha/Brent swap crack narrows to 45-month low on supply glut

Front-month Asian naphtha swap crack plunged to a 45-month low Tuesday, baulking the seasonal winter season uptick in the fourth quarter as oversupply continues to weaken fundamentals. 

     The November Mean of Platts Japan naphtha swap crack against November Brent crude swap fell 98 cents/b day on day to be assessed at minus $5.32/b Tuesday. The front-month swap crack was last lower at minus $5.89/b on January 8, 2015, S&P Global Platts data shows. 
Platts data shows front-month MOPJ naphtha swap cracks are typically strong during the month of October. But an extended period of ample supply against slow demand has pressured down the market, according to trade participants. 

     In the physical market, the CFR Japan naphtha physical market structure is in contango, with the spread between the first-line and third-line trading cycles at minus $2.25/mt for first-half December/first-half January on Tuesday. 

    The November/December MOPJ naphtha swaps structure was at parity Tuesday, with both outright swaps assessed at $660/mt. 

    Further out, the Q1/Q2 quarterly spread narrowed $2.92/mt from Monday to $9/mt, the lowest point in nearly four months from June 29, when the prompt quarterly spread was assessed lower at $8.58/mt.