Overview
The European and Asian naphtha markets saw diverging fortunes as the M1 East/West reached highs of $40/mt last week. Eastern strength was driven by a combination of softer crude, MOPJ MOC buying, and propane strength. Given the continued narrowing of FEI/MOPJ differentials, and the greater selling flows this spawns, this may lend continued strength to MOPJ as crackers seek to buy the relatively cheaper and more competitive naphtha. Meanwhile, Europe saw relative weakness, with blending demand softening on the back of weaker gasoline cracks and higher ARA inventories. Cracks rallied modestly on 8 Dec but sentiment remains subdued. Open interest in the Jan’26 NWE crack is nearly on par with the 5-year high of 21mb. Positioning in cracks see a sell side split in 1H26, with the exception of Mar’26. The East/West has come off from highs of over $40/mt towards $37.50/mt in Jan’26, while front E/W boxes remain elevated. The FEI/MOPJ rallied by $20 in Jan’26 over the week, while the Jan’26 gasnaph fell by over $10 over the week.
From a technicals perspective, momentum is generally getting softer. The MOPJ crack remains confined within its horizontal channel between -$0.60 and $0.60/bbl, with momentum indicators showing weakening trend strength and the MACD crossing below zero, a breakout beyond the channel is required to shift sentiment. The East/West reversed lower from $40/mt, confirming a shooting star reversal pattern with fading RSI and weakening stochastics, with potential for a retracement toward $35/mt. Gasnaph continues to trade with a bearish bias, slipping lower toward $113/mt as negative momentum builds and candles widen; a further test of trendline support and potentially the $102/mt level looks likely. In contrast, FEI/MOPJ retains a constructive tone, supported by hammer candlesticks and a confirmed rising trendline; RSI sits above 60 and stochastics remain comfortably below overbought, suggesting room for further upside toward the late-November resistance around -$23/mt.
