Japanese Refineries Resumed Production

Nippon Oil Corp. and Idemitsu Kosan Co., Japan's two largest refiners, resumed operations at their units after scheduled maintenance, adding to kerosene inventories that have risen more than 10 percent from a year ago.

Nippon Oil restarted a 140,000-barrel-a-day crude distillation unit at Mizushima refinery yesterday. The Tokyo-based refiner will resume operations of a 150,000-barrel-a-day unit at the Negishi refinery near Tokyo tomorrow. Idemitsu yesterday restarted operations of a 120,000-barrel-a-day unit at the Tokuyama refinery.

Stockpiles kerosene, used as heating fuel in Japan, have swelled as warmer weather so far this year reduced demand for heating. Japan Meteorological Agency forecast last week that the country will have higher-than-average temperatures between November and January.

"Inventories of kerosene and gasoline have piled up,'' said Ken Hasegawa, a manager of the international division at commodity futures broker Himawari CX Inc. in Tokyo.

"A combination of higher oil stocks and warmer weather is a headache for refiners during winter.''

Kerosene stockpiles held by refiners, wholesalers and trading companies in Japan have climbed to 5.05 million kiloliters at the end of September from 4.58 million kiloliters a year earlier, according to data from the Ministry of Economy, Trade and Industry.

Households in the northern part of Japan, including Hokkaido island, typically would have increased heating demand in October as winter sets in.

Japanese oil refiners shut plants on a staggered basis to conduct regular inspections and maintenance during spring and autumn when petroleum demand is lower.

A crude distillation unit is the main part of a refinery that processes crude oil into products such as gasoline and kerosene.

"Refiners may be taking measures in the weeks ahead to prevent a further slide in kerosene prices, such as a cutback in refinery operations,'' Hasegawa said.