Naphtha Prices Surged Amid Increased Crude Oil Prices in the USA Market

Naphtha prices witnessed an upward trend in the last week of August 2024. The month of August showed nuanced price trend as prices showed notable fluctuations throughout the month. Increase in the prices were attributed to various factors such as feedstock cost, logistical issues, supply and demand dynamics and global market conditions etc. According to analysts at ChemAnalyst, Naphtha prices increased by a margin of 4.6% indicating bullish market sentiment in contrast with the previous week trend.

In the feedstock market, US commercial crude oil inventories declined by 6.9 million barrels from the previous week. At 418.3 million barrels, U.S. crude oil inventories were about 5% below the five-year average for this time of year. International crude oil prices witnessed an upward trend due to decline in inventory size and as investors weighed supply concerns in Libya and Iraq, although signs of weakened demand, particularly in China, limited gains in the prices were observed. Further support came from discussions between the Organization of the Petroleum Exporting Countries and allies led by Russia, known collectively as OPEC+, about delaying output increases due to start in October in hope of increasing oil prices in the international market. The fuel demand remained weak from major importer China leading to limited gains in the market. Naphtha prices showed growth in the US market paralleled by growth in crude oil prices as Naphtha prices are closely influenced by international crude oil prices. Refining profit margins increased in Asia reflecting the positive business sentiment for refiners and manufacturers in Asia.

The US Gulf coast, a key production and distribution hub for Naphtha in USA experienced disruptions due to a recent hurricane which led to supply disruptions, production slow downs and logistical challenges which further influenced the price dynamics of Naphtha in the country. Various refineries in the country are recently undergoing maintenance shutdowns which further affecting the production capacity in the country and contributed to the uptick in the product prices. All the relevant factors affected the supply and demand for Naphtha in the market which ultimately led to the surge in prices in the US market. Looking further, the prices of Naphtha are expected to grow in accordance with the growth in crude oil prices in the market. However, as demand of crude oil remained tepid from countries like Asia, the gains would be not ne notable. Changes in weather conditions may affect the production and distribution of Naphtha in the country which could affect the pricing dynamics of Naphtha in the domestic and international market.