The drop in profits could reduce Asian refiners' demand for incremental crude in the near term and weigh on global prices. "We're still positive on global refining margins this year, especially in H1 18, with the lack of any significant capacity additions in the early part of the year and the current momentum in global demand growth," Nevyn Nah, oil products analyst at Energy Aspects in Singapore, said by email.
Refining margins stayed above $7 a barrel for most of the final quarter in 2017, encouraging refineries from China to Thailand to crank up output to full rates. The volume of crude processed by the region's top four refiners by capacity - China, Japan, India and South Korea - hit an all-time high of about 23 million bpd in October, data on Eikon showed.
China also raised refined products export quotas to its four state oil majors by 30 percent in the first batch of allowances for 2018. The premium of gasoline over Brent crude oil fell below $7 a barrel on January 3, for the first time since September 2016. Demand for fuel oil in Asia recently took a hit after Pakistan said it had indefinitely suspended imports of the fuel, used in power generation, as it switched to liquefied natural gas to meet its power requirements. That has removed about 400,000 to 650,000 tonnes of monthly fuel oil demand.