SINGAPORE: The Asia-Pacific crude market could come under pressure as refining margins begin to fall from multi-year highs.
Asian refining margins have started to slip over the past week after refiners enjoyed their highest profit margins in years in the first quarter.
Complex refining margins in the Singapore hub have averaged around $8 a barrel over the past week, down from an average of around $9.30 a barrel in March.
"I think by the middle of the year Asian refiners will be in a more competitive market," Richard Gorry, analyst at JBC Energy, told Reuters Global Oil Forum, pointing to higher inflows of light distillates from the West and of gasoil from new refineries in the Middle East.
"Cracks are already starting to come off their highs," he said.
Still, refiners have plenty of supply available. Saudi Arabia has revved up crude production to 10.3 million barrels per day (bpd), its highest rate on record, the Kingdom's oil Minister Ali al-Naimi said.
Japan's commercial crude oil stocks rose 98,000 kilolitres to 14 million last week, data from the Petroleum Association of Japan (PAJ) showed on Wednesday.
Refinery run rates in Japan rose marginally to 84.2 percent last week from 84.1 percent the week before, PAJ said.
In a tender for June delivery of sweet crude, Indonesia's Pertamina bought 950,000 barrels of Egypt's Qarun crude, traders said. The cargo was in addition to purchases of Escravos, Saharan Blend and Coco, as reported last week.
Brent-Dubai Exchange of Futures for Swaps (EFS), or Brent's premium to Dubai swaps, widened 20 cents to $1.65 a barrel, its highest since March 13.
State oil firm Petronas has set the price factor for Malaysian Crude Oil (MCO) for April at $5 per barrel, unchanged from the previous month, the company said on Wednesday.
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