The reforming margin -- the price difference between naphtha feedstock and 95-octane -- was squeezed for the second consecutive day as aggressive offers in Thursday trade narrowed the margin by around 20 cents per barrel.

On Friday, traders said the 95-octane gasoline price fell after an offer on 50,000 barrels of 95-octane lifting February 24-28 was heard at $12.55.

While naphtha prices dropped only around five cents per barrel compared with Thursday, the 95-octane offers were 30 to 50 cents per barrel lower than Thursday's valuations.

Sources said they expected the reforming margin to either stabilise at Friday's levels of around $1.20 to $1.50 or narrow further next week.

The reforming margin had widened at the end of December to well over $2.00 per barrel on Indonesian January andFebruary demand.

The margin had started to narrow last week after it became apparent Indonesia would not seek March gasoline cargoes.

They said it was unlikely the margin would widen anytime soon due to the lack of spot demand and oversupply in the region.

Meanwhile naphtha traders were still waiting for word on the Kuwait Petroleum Corp (KPC) term negotiations underway this week in Singapore.

Traders said Japanese buyers were holding firm to their ideas of $2.50 to $3.00 premiums, while KPC premium ideas were just slightly under $6.00 per tonne.

South Korean and other buyers were scheduled to start their term talks with KPC next week in Singapore.

South Korean sources said their negotiators had anticipated the Japanese negotiations would be concluded before the start of talks with other Asian buyers.

But since no conclusion had been reached between KPC and Japanese buyers, it remained to be seen what form negotiations between all parties will take next week.