NEW DELHI: Asia’s naphtha market plunged to a more than three-month low on Wednesday as weaker prices of alternative feedstock liquefied petroleum gas (LPG) hit demand for the product at petrochemical units, traders said.

The profit margin on refining naphtha dropped by $4.55 to $37.03 a tonne over Brent crude oil, while the backwardation in markets narrowed by 50 cents to $6 a tonne.

Swing petrochemical crackers can switch up to 10-20% of their feed to LPG to take advantage of cheaper raw material.

At the Singapore deals window there were two offers for first-half July cargoes without any bids, resulting in no trades. There were no bids, offers or deals for gasoline.

Light distillate inventories at the Fujairah commercial hub rose by 1.395 million barrels to the highest in eight months at 8.565 million barrels in the week to April 17, S&P Global Commodity Insights data showed.

US gasoline stocks fell by about 1.02 million barrels, market sources said, compared with analyst expectations of a 1.3 million barrel decline.

Oil prices dropped sharply on Wednesday, sliding by 2% as potential US interest rate hikes that could slow growth and curb oil consumption outweighed strong Chinese economic data and falling US inventories.

India and China have snapped up the vast majority of Russian oil so far in April at prices above the Western price cap of $60 a barrel, according to traders and Reuters calculations.