By Jane Lee
Nov. 6 (Bloomberg) -- Merrill Lynch & Co. cut its estimates for Singapore oil-refining profit, citing a slowdown in demand growth and an increase in processing capacity.
The forecast for Singapore complex margin for 2009 was lowered by 20 percent to $7.20 a barrel, and the margin for 2010 reduced by 9 percent to $7 a barrel, Merrill said in a report today. Margins could tumble as low as $4 a barrel should Asia fall into a recession, the bank said.
A slowdown in economic growth in China, India and neighboring countries will reduce travel and cut consumption of diesel, gasoline and jet fuel. Oil demand in Asia including Japan will grow 300,000 barrels a day next year while new refinery capacity is at 1.7 million barrels a day, Merrill said.
``If the global economic condition deteriorates more aggressively than our base case, we believe there is further downside to our forecasts,'' six Merrill analysts including Sonia Song and Duke Suttikulpanich said in the report.
To contact the reporter on this story: Jane Lee in Kuala Lumpur at jalee@bloomberg.net
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