Return
to Story Page
To print: Select File and then Print from your
browser's menu
Lawrence Yong
Singapore, Feb 22: The Asian oil products market will wallow in softness this week as the focus remains on poor demand fundamentals, traders said on Monday.
Gas oil prices still had room to fall while fuel oil, naphtha and gasoline prices would at best remain stable, they said. "Gas oil is still under pressure. I don't see fresh regional demand popping up," one trader with an Asian oil company said.
Traders said with crude prices seen staying in a range, gas oil sellers would risk lowering offers to entice buyers. Last Friday, the Singapore gas oil cash market was traded lower at $11.80, less than 60 cents per barrel away from the 12-year traded low of $11.25, set in early December, they said.
Only a local trader Hin Leong Trading gave the market consistent buying support as it eased and this provided a temporary psychological bottom.
Traders said the market would otherwise weaken on account of key gas oil buyers like India, China and Indonesia dropping import requirements in March.
Althoughmoderately low storage levels in Singapore might encourage some to keep cargoes, the contango between March and April was still not wide enough to give a clear profit. Traders said selling pressure also came from Singapore refiners hiking runs from February and Korean refiners, who were lowering post-winter heating oil stocks.
India and Indonesia were expected to source for April imports from this week, the only bright spark now on the demand side. The state-owned Indian Oil Corp has re-issued a tender to buy April to June delivery diesel while Indonesia, after foregoing March imports, was also expected soon to tender for April requirements.
The fuel oil market was supported on swaps futures trading last week but traders said they expected fundamentals to check the market's rise. "There may be some people pushing the paper up for pricing purposes but at the moment, it just doesn't make sense," said one trader with a European oil company. "There are so many sellers on physical against one buyer," headded.
The market was still vulnerable to downward pressure due to incoming exports from the Arab Gulf and the lack of demand from key buyers, traders said. Many cargoes loaded from Saudi Arabia, Kuwait and Iran were already on the water and homeless, they said. Sellers anticipated China would issue a big quota to buy fuel oil in the first quarter but so far, only minimal imports were seen going in through Hong Kong.
Naphtha trading was expected to thin out as Japan and South Korean ethylene plant headed into a maintenance shutdown season in the second quarter.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
------------------------------------------------------------
This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
------------------------------------------------------------