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Asian oil demand to fall if prices stay up-Caltex

SINGAPORE: Asian oil demand will fall if crude oil prices stay above $30 per barrel, Caltex Corp's chairman and chief executive Jock McKenzie said on Monday.

"If prices stay up where they are at the moment, there definitely will be a negative impact on Asian demand growth," McKenzie told reporters after launching the company's new Vortex brand gasoline formula.

He said the company already experienced difficulty passing on higher crude costs to consumers in most Asian markets, noting this was the case in the Philippines.

"I don't really expect (prices) to stay at current high levels."

Judging from the market' backwardation, prices should fall from April when OPEC raises output as expected, McKenzie said.

Future oil price direction depended on oil cartel OPEC's output decision, he said, adding that the market was short some 2.5 million barrels-per-day (bpd) in supply.

Benchmark front-month U.S. light crude futures were trading at $31.52 per barrel on Monday, down from nine-year highs of $34.20 reached last week.

McKenzie said Caltex had forecast Asian clean products -- gasoline and diesel -- demand, excluding Japan, to grow five percent in 2000, a rebound from the last two year's of economic crisis.

He said dirty products -- fuel oil and residues -- would see slightly smaller growth.

Caltex sources estimated recently that oil demand in Asia during 1999 increased two to three percent.

Caltex, a Chevron and Texaco downstream joint venture with total refining capacity of 950,000 bpd, operates in more than 60 countries in the Asia Pacific region.-Reuters