In Singapore, June jet fuel swaps were last quoted at 45/60 cents above gas oil, its highest premium so far this year, despite the absence of North Asian winter heating oil demand for jet-kerosene.

The high paper premium was also seen in the physical market where a 120,000 barrels jet fuel cargo traded at $18.25 per barrel last Friday, 40 cents more than a similar gasoil physical deal.

Traders said state-owned Indian Oil Corp (IOC)'s purchases of between 160,000-180,000 tonnes of superior kerosene for June delivery, matching its April and May purchases were above expectations.

Traders were earlier only expecting IOC to take up to 90,000 tonnes for the June tender. Last year, India cancelled its June kerosene tender, buying only 90,000 tonnes in May 1997 and 45,000 tonnes in April 1997.

Theincreased second quarter imports were attributed to lesser term contract supplies, an IOC source said.

"Our term volume have come down and we have not finalised new contracts yet," the source said.

IOC has term contracts with Middle East producers Kuwait Petroleum Corp (KPC), Bahrain National Oil Co (Banaco) and Abu Dhabi National Oil Co (Adnoc) for over two million tonnes but were mostly for the year to May. IOC had cancelled a term tender to buy kerosene from June 1998 to May 1999 without making any awards on April 20.

But traders said that the purchases were also likely to have been spurred by an increase in domestic demand with some portion of the kerosene blended into the gas oil pool.

"The (Indian) government wants to release more kerosene into the domestic market, which is still subsidised, in a move to be more popular," a senior trader with an oil major had said on Friday.