London (Platts)--3Aug2011/706 am EDT/1106 GMT

The price spread between gasoline and naphtha in Northwest Europe has narrowed Wednesday, following gains in the September naphtha crack spread.

Naphtha is a key feedstock used in gasoline blending. When the price of naphtha becomes more expensive relative to gasoline, blending margins for the road fuel typically narrow.

The gasoline-naphtha spread was assessed at $46/mt Tuesday, down $6/mt from Monday, and down $16/mt from last Wednesday.

The gasoline-naphtha spread narrowed following gains in the front-month naphtha crack spread, the relative value of the product to crude.

The front-month naphtha crack spread is currently trading at minus $6.05/barrel to ICE Brent, from almost minus $6.50/b on Monday.

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In contrast, the September gasoline crack spread is trading at plus $6.80/barrel, down by 40 cents/barrel from Tuesday's assessment.

Naphtha values have strengthened this week amid higher gasoline blending demand, as good arbitrage economics for shipments from Northwest Europe to the US and West Africa encouraged traders to make gasoline for export.

"The [gasoline-naphtha] spread is a bit softer today. Gasoline previously had a big rally, but it is coming down," a Europe-based trader said Wednesday.

--Victoria Baghdjian, victoria_baghdjian@platts.com