Naphtha prices witnessed a notable surge in the week ending on 20^th December 2024. The prices followed the same trend as the previous week reflecting the slight bullishness in the market conditions. Naphtha prices are generally closely related to crude oil prices in the international market. While the WTI and Brent crude oil witnessed minor fluctuations in the past few weeks, the prices of Naphtha also continued to witness slight bullish market sentiment. The prices witnessed an increase of 1.5% as compared to the previous week.

The primary driving factor for Naphtha prices in the European market included the crude oil prices, refining margins, business sentiment and various other factors. In the crude oil market, the prices of Brent oil also increased which also supported the overall bullish market sentiment. The trade relations between USA and European Union are under pressure after the election of Donald Trump as president in the previous month. Donald Trump has threatened the European Union with tariffs if its member countries don’t buy more American oil and gas. As Naphtha is a crude oil refinery product, the prices of naphtha may also be impacted by this announcement. The newly elected President is willing to impose tariffs if the European Union failed to make up for their tremendous deficit with the United States by the large-scale purchase of oil and gas.

The demand for heating oil was expected to increase in the European regions amid the ongoing winter season. But the demand declined as heating oil consumers in Germany are showing declined buying interest and purchasing activities because of high inventories in the market, while importers are lowering their diesel stocks to maintain low bio-blended reserves. Heating oil was traded higher in the week which further pushed the consumers to refrain from buying last minute purchases ahead of the Christmas holiday. Importers are striving to keep their diesel stocks minimal until the year’s end due to the holiday season. The overall consumption of petroleum products witnessed a downward trend ahead the holiday season in Europe. All the geopolitical and demand factors led to the overall increase in the prices of Naphtha in the European market.

As the prices of Naphtha are closely related to crude oil market conditions, the prices are expected to rebound in the European market amid increased fuel demand in the coming months. The winter season may offset the demand for Naphtha and natural gas in the European market leading to increased prices and increased consumption. The coming weeks after the holiday season may witness rejuvenated business sentiments and increased purchasing activities to replenish the inventories leading to the overall bullish market sentiment.