The prices of Naphtha witnessed a significant downward trend in the week ending on 24th January 2025 in the USA market. The prices plummeted by 4.1% as compared to the previous week reflecting drastic changes in the previous week's trends. The market sentiment was bearish amid declining feedstock costs in the market. The crude oil prices plummeted which ultimately pushed the prices of Naphtha in a downward direction. The demand from downstream sectors remained subdued which further pushed the prices in a downward direction.

As per ChemAnalyst, this downward trend for Naphtha is expected to be sustained in the upcoming weeks of February 2025 due to a foreseen drop in the feedstock Crude oil prices which could lower the manufacturing costs. However, the Naphtha market could rebound from mid-February 2025 as the rise in procurement in the global market is expected from the downstream petrochemical sector post-Lunar New Year.

In the current week, this unexpected drop in Naphtha prices comes against the backdrop of high refining activity and surplus production have led to an oversupply situation, creating downward pressure on prices. The petrochemical sector, a key consumer of Naphtha, is experiencing reduced activity due to weak global demand for plastics and chemicals, exacerbated by macroeconomic uncertainties and slower industrial output. External factors, including disappointing manufacturing data from major economies like China and global economic concerns, further dampen market sentiment. Buyers have adopted a cautious approach, reduced spot purchases, and contributed to weaker market dynamics.

In the current market, the prices of feedstock WTI crude oil declined. The prices were weighed down by US President Donald Trump’s call for lower oil prices during the Davos forum. Trump's strategy to pressure Saudi Arabia and OPEC to lower prices, along with increased U.S. oil production, fuelled bearish sentiment in the market. At the same time, his threats of tariffs on China, Canada, and Mexico heightened concerns about slowing global economic growth, potentially reducing oil demand. Meanwhile, U.S. crude oil inventories increased by 1 million barrels last week, according to the American Petroleum Institute, while gasoline and distillate stockpiles grew by 3.23 million and 1.88 million barrels, respectively.

As bearish sentiment gripped the oil market, Naphtha prices experienced significant downward pressure, reflecting the overall trend. President Trump’s push for OPEC to reduce oil prices added to the market’s uncertainty, further impacting Naphtha valuations. Additionally, demand from key importers like China remained sluggish, influenced by the Lunar New Year holidays, which typically slow industrial activity. Disappointing manufacturing data from China compounded concerns about global energy demand and cast a shadow over the crude oil outlook, directly influencing Naphtha market sentiment.