The prices of Naphtha in the U.S. market surged in mid-February, reflecting a bullish trend driven by multiple supply and demand factors. Analysts at ChemAnalyst attribute this increase to reduced gasoline production, fluctuating refinery utilization rates, and shifting inventory levels, which collectively constrained naphtha availability. Despite relatively stable crude oil prices, naphtha surged due to changing consumption patterns, particularly in gasoline blending and petrochemical sectors.

A decline in gasoline production and lower blending component inventories indicated a higher reliance on naphtha-based stocks, further tightening supply. Additionally, refinery utilization rates remained volatile, influencing production output. As demand for naphtha remained strong while supply struggled to keep pace, prices continued their upward trajectory. Market participants are closely monitoring refinery operations, gasoline inventory trends, and potential shifts in feedstock allocation to anticipate further price movements.

The prices of Naphtha are highly dependent on crude oil market fluctuations, which can directly impact costs. Given current supply constraints and rising demand in gasoline blending and petrochemical production, the bullish trend in U.S. naphtha prices is likely to persist. If refinery utilization rates remain low or decline due to operational constraints or maintenance shutdowns, supply limitations could continue to exert upward pressure on prices.

According to the latest EIA report, U.S. refineries operated at approximately 85% capacity, leading to supply constraints that drove prices higher. As a crucial feedstock for gasoline blending and petrochemical production, naphtha's availability was impacted by reduced gasoline output, which declined to approx 9 million barrels per day. Additionally, a 0.2-million-barrel drop in total motor gasoline inventories further signaled tighter supply conditions, contributing to the price surge.

On the crude oil front, prices declined slightly during mid-week of Feb as optimism grew over a potential peace deal between Russia and Ukraine, which could ease global supply disruptions and lead to the lifting of sanctions on Moscow. However, the downward trend in crude prices was partially offset by the delayed implementation of immediate U.S. reciprocal tariffs, maintaining some uncertainty in the energy market.

On the demand side, while finished gasoline inventories increased, the decline in blending component inventories suggested a higher consumption rate of naphtha-based blending stocks, further driving up demand. Additionally, the increase in distillate fuel production to approx. 5 million barrels per day diverted some refinery capacity away from naphtha output, exacerbating supply constraints. These combined factors—reduced gasoline production, lower blending component inventories, and constrained refinery output—have put upward pressure on prices in the U.S. market.