European naphtha cracks against North Sea Dated crude fell to a six-month low in mid-January, pressured by weak gasoline export demand, contango-driven storage economics and uneven petrochemical consumption. Naphtha cif northwest Europe traded at a discount of $8.68/bl to North Sea Dated on 14 January, the widest since July 2025, Argus data show.
Cracks have softened despite brief periods of outright price strength earlier in the month, when rising crude values and improved refining economics offered temporary support. But underlying fundamentals have weakened, with limited prompt demand to absorb supply in northwest Europe, market participants said.
Gasoline market softness has been a key driver — Eurobob non-oxy export demand has slowed, particularly into west Africa, one of the largest outlets for European gasoline. Regulatory constraints in Nigeria, including delays in import licensing, alongside rising freight costs, have reduced arbitrage viability, participants said. Blending is also seasonally slow in January, further limiting demand for naphtha as a blending component.
Contango across the gasoline forward curve has reinforced the pressure, encouraging storage rather than prompt sales. Gasoline stocks have built at the Amsterdam-Rotterdam-Antwerp (ARA) hub, reducing the need for fresh blending and weighing on naphtha cracks. European naphtha supply contracted month on month, Opec said in its January Monthly Oil Market Report, while rising gasoline inventories indicate limited pull for naphtha into the blending pool, with product increasingly moving into storage rather than being exported.
Petrochemical demand has offered little relief. End-year destocking weighed on naphtha consumption in December, while cracker utilisation recovered only gradually in early January. Naphtha briefly became more competitive against propane at the start of the year, supporting a short-lived increase in cracking activity, particularly in Germany's Rhine region, as northwest European naphtha fell to a discount to propane for the first time since January 2023.
That window has since closed. Propane has returned to a discount relative to naphtha, and LPG analysts expect propane's steep forward backwardation to reassert its economic advantage in coming months, limiting any sustained feedstock switching. Although ethylene margins to naphtha have improved, ethylene demand overall remains slow, and operational issues at some European crackers have capped any material increase in naphtha intake.
Venezuela has yet to materially tighten the European market. Vitol will load its first naphtha cargo to Venezuela, sourcing around 52,000t from Houston, as recent political developments have stimulated demand for naphtha to dilute the country's heavy crude. Direct naphtha loadings from Europe to Venezuela are not expected because European trading firms would probably require a special licence to export to the region, making an increase in naphtha loadings to the US more likely, a Venezuelan market participant told Argus this week. A 41,000t cargo of European naphtha departed from the Vopak Europoort terminal in Rotterdam for the US Atlantic coast, data from ship tracking platform Kpler show. Naphtha loadings from the ARA hub to the US east coast also rose last week, Rotterdam-based consultancy Insights Global said.
Supportive factors for naphtha may emerge later this quarter, but for now remain largely prospective. Upcoming US refinery maintenance is expected to lift demand for imported gasoline, potentially drawing stored naphtha back into the blending pool. US independent refiner Valero reported maintenance on 12 January at its 205,000 b/d refinery in Houston, Texas. Seasonal maintenance in Saudi Arabia supported European gasoline flows into the Middle East in December and may increase in January, according to data from Kpler and Vortexa, helping to provide a floor for northwest European naphtha values.
