The Asian gasoline naphtha differential, 92/MOPJ, has not had a spring in its step since entering March. Prices for the Q2 tenor have fallen from highs of $21/bbl handles on Feb 28 to close just beneath the $19/bbl come Mar 11.
A poorer Eastern gasoline structure, with a weak cash being coupled with a few players swinging a clear sell side axe, saw the front 92 spread come off to 80c/bbl handles. However, with greater buying interest coming from refiners this week, the front spreads could find some support and overall lift Q2 92 structure.
In regards to naphtha, Q2 MOPJ cracks have seen significant support, rallying to close above the -$5/bbl mark on Mar 11. Although, upon the news of mass Ukrainian drone attacks launched against Russia, notably damaging Lukoil’s Norsi refinery, in-the-money longs could utilise this as the perfect moment to take some profit through selling into the news.
In turn, our trade idea for this week is to long the Q2 92 MOPJ contract, with the expectation that these current levels could look attractive again and encourage participants to pick up bids once more.