Bearish news to dominate oil product market

Bearish news to dominate oil product market

SINGAPORE (Reuters): Indonesia's decision to cut oil imports
in February and March will give another blow to Asia's bearish
oil product market, which has seen little demand during the
region's economic crisis, traders said yesterday.

Indonesian state oil company Pertamina said last week its oil
product imports might grind to a halt in March to help stop a
drain on foreign exchange.

"We expect to import half of our monthly average of 150,000
barrel per day (bpd) in February and we expect zero imports in
March," a Pertamina director, Samto Utomo said last week.

Although the cut was no surprise to the market, oil product
prices would still come under strong pressure as international
oil markets head into the second quarter, traders said.

Seasonal oil demand and prices traditionally fall in the
second quarter with the onset of warmer weather in the northern
hemisphere.

Due to the economic crisis in Asia, the U.S. Department of
Energy (DOE) last week reduced its monthly forecast for oil
demand this year in Asian countries -- excluding China and Japan
-- by 300,000 barrels to 9.1 million barrels per day.

The DOE also lowered its 1999 forecast for oil demand in the
region by 500,000 barrels to 9.5 million barrels a day.

Traders were not optimistic despite gains in Asia's fuel oil
market last week.

The market was bought up by one Middle East trader and a local
trader to $61 per ton from $53 for the 180-centistoke grade, but
the absence of buyers on Thursday and Friday quickly pulled
prices down again.

"There is no change in fundamentals. There is still a lot of
oil and there is still no enduser demand," said one trader.

Singapore's weekly residues stocks rose by 7,000 barrels in
the period between Jan. 26 and Feb. 4 to 10.503 million barrels,
the Singapore Trade Development Board said.

Although the buildup was smaller than in previous weeks,
traders said the level was still high and there was no immediate
demand to absorb the stocks significantly.

The gas oil market found a new floor late last week as buyers
emerged to support the market despite reduced regional demand,
but traders said the market was still adjusting to news that no
import from Indonesia for March.

Traders said they expected prices to come under renewed
selling pressure despite the latest support.

At the light end of the barrel, the market was also flush with
both naphtha and gasoline, while buyers were few and far between,
traders said.