"All of the Japanese trading houses are looking for cargoes," a middle distillate trader with a South Korean refiner said.

"Some companies are looking for fourth quarter requirements. Some companies are looking for prompt barrels. But they are mainly focused on November."

Japan's kerosene demand always makes a seasonal upturn around this time of year, but traders said the number of inquiries from Japanese trading houses had ballooned since the yen strengthened sharply against the greenback late last week.

Brisk buying interest pushed up spot premiums for small cargoes by around 50 cents to $1.00-$1.50 per barrel over the mean of Singapore quotes on an fob South Korea basis, Japanese and South Korean traders said.

Japanese trading houses are seeking South Korean kerosene cargoes because they meet Japanesespecifications and can be sold in the domestic market through their own retail networks without additional refining.

Trading houses in Japan need to import oil products whose specifications meet Japanese standards as they have no refining facilities of their own.

In contrast to its effect on oil product dealing, the yen's appreciation has had little impact on trading houses' crude trading activities as they buy and sell crude cargoes in dollars as middlemen.

Nor has the stronger yen changed the crude buying patterns of Japanese refiners, another group of major players in the regional oil market, said oil traders at refiners.

"We are not like trading houses. Our purchases cannot be free from physical demand. Most of the time, we keep buying constant volume regardless of the exchange rates," said one trader at an oil firm.

Some traders said, however, that Cosmo Oil Co Ltd's recent purchase of one million barrels of jet/kerosene could have been prompted by the yen's appreciation.

Cosmo bought four250,000-barrel cargoes of jet/kerosene to be lifted in Singapore between late November and January 1999.