Asian naphtha cracking spread falls from highs, near-far month premium hits record high

⑴ On Monday, Asia's naphtha refining margins slightly retreated from the record levels set in the previous trading day, but ongoing feedstock shortages continued to impact market sentiment, keeping crack spreads and prices elevated. As the month changed, the crack spread against Brent crude fell by about $26 to $341.85/ton. ⑵ The futures premium structure between near-month and far-month contracts expanded to a historical high of about $105/ton, reflecting the market's extreme tightness in near-term supply. Market participants noted that Singapore's trading window saw multiple bids for cargoes in early May, late May, and early June, while there was only a single offer for early June cargoes. ⑶ Analysts and traders pointed out that recent cargoes have been most affected by the ongoing crisis in the Gulf region, with next month's parcels to Japan quoted at triple-digit premiums. Earlier reports indicated that oil loading operations at the UAE's Fujairah port were suspended due to a fire caused by a drone attack. ⑷ Gasoline crack spreads remained steady near a four-year high on Monday, around $34/barrel, as the market worried about supply shocks. The US President's call to form an alliance to help reopen the Strait of Hormuz appears to have gone unanswered, with both Japan and Australia stating they do not plan to send naval vessels to the Middle East for escort duties. ⑸ The continued rise in oil prices further supported the naphtha and gasoline markets. Although crack spreads have slightly retreated from their peak, the ongoing threat of supply disruptions has kept the market structure strong, and the near-month contract premium reflects the current tightness in physical supply.