The Mar naphtha E/W contract has been an incredible contract to follow into this year. We first saw prices surge upwards on the back of attacks on ships by the Yemen-based Houthis in the Red Sea. Prices for the Mar E/W rallied from under $15/mt on Jan 10 to $23/mt in the following week. This strength intensified towards the end of January, on the back of drone attacks by Ukraine on Russian oil infrastructure, generating significant volatility surrounding the supply of Russian naphtha – which prices off the Eastern MOPJ benchmark.
The Mar E/W contract skyrocketed to a high of $35.50/mt on Jan 29 but ultimately settled at $28.75/mt the same day – recording the magnitude of volatility in the E/W during this period. Finally, despite easing off to $22/mt on Feb 01, the E/W rallied to levels flirting with the $29/mt handles on Feb 06 following a slew of further attacks on Russian refineries. Despite the geopolitical risk premia buoying up the naphtha E/W, we recommended shorting the Mar E/W in our Feb 13 naphtha report. Find out more about the logic behind this trade in the case study below:
