Sharply lower exports from South Korea due to refinery maintenance, coupled with firm demand from China and Indonesia are set to keep Asian jet fuel prices near four-year highs as global supplies remain tight, traders say.

Physical jet-kerosene fuel prices in the benchmark Singapore market, last pegged at $44.70 a barrel, are at the highest level in three-and-a-half years. Prices peaked above $48 in 0ctober2000.

"It has clearly gone through the roof. From a regrade perspective, it's about at its limit," said a trader with an oil major.

The regrade, the price spread between jet-kerosene and gas oil, has widened to about $3 a barrel, a level uncommon for the second quarter when demand for kerosene - used in the northern hemisphere as heating fuel - slows with warmer weather.

Asian prices were also driven by healthy demand in Europe, which has drawn any supply emerging from Middle East refineries away from the East, traders said.

The trickle of Middle East spot jet

fuel supply has come mainly from Kuwait, as global supplies are hampered by maintenance at several of Saudi Aramco's refining facilities.

The jet fuel shortfalls are not helped by sky-high global gasoline values, which have encouraged some refiners to maximise production of the auto fuel.

The US market was also tight due to maintenance but there was little supply left in Asia to move across the Pacific despite the good arbitrage economics, traders have said.

South Korea's spot jet fuel exports for loading in June are capped at four to five cargoes, compared with 14-15 cargoes for the same month last year.

SK Corp, South Korea's biggest oil refiner which has Asia's single-largest refinery, plans to export only one parcel next month after shipping four to five cargoes for April and two for May, a company source said.

SK Corp plans to shut several refining facilities between May and July S-Oil Corp plans maintenance work at one of its main crude units for a month between May and June.

Taiwan's Formosa

Petrochemical Corp will skip its sale of a spot jet fuel cargo for this month and may do the same for June.

Formosa had lowered crude processing rates at its refinery during maintenance at a desulphuriser but planned to raise rates to nearly 90 percent of capacity after restarting the unit.

China Aviation Oil, which supplies nearly all of China's jet fuel imports and is driving Asia's demand, is set to buy another 30,000 tonnes for June. Ifthe tender is awarded, the firm's April-June imports would hit 660,000 tonnes, topping the last quarterly record of 383,000 tonnes in 2002.

Traders said Chinese refiners were producing more gas oil to ease a supply shortfall as the country braced for a worsening power shortage at the expense of jetkerosenefuel.

High prices have also not deterred Indonesia, which is seeking 200,000 barrels of jet fuel by tender for June, more than the 110,000 tonnes bought for May. Traders said state oil firm Pertamina might have been compelled to seek distillates due to some maintenance work.