“The market is dropping at a fast pace because of extra supply from the East,” said one trader.

“I expect it to continue over the coming few weeks.” 

Gasoline supplies have increased with Shell having partially restarted its 500,000-barrel per day (bpd) plant and India’s Essar having completed a 35-day maintenance on Oct. 23 to raise capacity by 25 percent.

The easing of the gasoline supply crunch weighed on premiums.

“It has been a very quite week in the Middle East because of the Eid holidays,” a second gasoline trader said.

“But once thing are up and running again I expect that we’ll start seeing lower premiums for gasoline.”

He said he expected premiums around $90 a ton over benchmark naphtha spot quotes while a third gasoline trader pegged gasoline premiums at around $120 a ton.

Traders were still awaiting the results of a products tender by Iraq’s SOMO, which is seeking to buy 2.43 million tons of gasoline, gasoil and kerosene in the first half of next year.

One trader said he expected the tender to either be canceled or reissued as the sales prices offered were not found favorable by SOMO.

“As for naphtha, things are still looking bad since its all linked to how well the petrochemical industry in Asia picks up,” the trader said.

The weak market has prompted ADNOC to cut its 2012 naphtha offers by up to 12.5 percent to $17.00-$18.50 a ton to its own price formula on a free-on-board (FOB) basis for three of its naphtha grades.

In Asia, traders also said that as long as China shuns petrochemical imports, Asian demand for naphtha — the main building feedstock for petrochemicals including plastics and aromatics — would remain sluggish.

Asia’s top naphtha buyer Formosa Petrochemical is running its 2.93 million tons per year (tpy) at a reduced rate of around 80 percent of capacity to combat poor margins.

The gasoil market was tight, with low sulphur gasoil, also known as 500 ppm, at around $3 a barrel.

Kenya is seeking 50,000 tons of diesel and gasoline for December, after securing over a total of 250,000 tons of the two products for November and December, trading sources said.

One trader said Kenyan demand was not unusually high but meant to stock up ahead of a busy December, when demand is usually higher.

For higher sulfur gasoil, premiums were around $1.40 to $1.50 a barrel.

“Markets are still tight,” another middle distillates trader said.

The fuel oil market in Fujairah was stable but could soon tighten, traders said.

“It is its fairly balanced with a positive bias meaning leaning toward tight at the moment,” a fuel oil trader said.

Bahrain’s Bapco sold two cargoes for December loading, another trader said.