China Petroleum & Chemical (Sinopec) expects strong growth in operating profits at its refined oil marketing and distribution division in the second half of this year, after an anomaly in the market's pricing of refined oil has been corrected. Vice-president Zhang Jiaren said yesterday the firm would see a 'substantial' rise in the division's profit in the second half, compared with the first half. The division accounted for 6.3 per cent of operating profit in the first half, down from 18.26 per cent for last year. Oil exploration and production accounted for 70.98 per cent of operating profit last year. Plagued by regional oversupply which slashed profit margins, the marketing and distribution division's first-half operating profit plunged 68.75 per cent year on year to one billion yuan (about HK$936.9 million). The decline was due to an oversupply of refining products which saw petroleum fall as much as US$3 a barrel lower than that of crude oil from mid-June to mid-August, Mr Zhang said. In the past 10 years, petroleum prices have traded cheaper than crude oil in Singapore only for nine months, according to Sinopec. 'Singapore's [petroleum] price has now risen to US$31.8 a barrel equivalent,' he said. This compared with US$28.45 of London's Brent crude oil early yesterday. China's refined oil prices are pegged to Singapore's prices with a one-month time lag. The time lag exposes refiners to manipulation by retailers who can speculate on the following month's Chinese prices by watching the current Singapore prices. He said Sinopec wanted Chinese prices to also be benchmarked to other international prices such as New York and Rotterdam. He blamed the distortion on Singapore's thinner trading, adding China's product consumption mix was different from Singapore - which called for wider benchmarking representation. Despite increases in oil prices after the terrorist attacks on the United States, Mr Zhang said he believed the rises would be temporary and short-term, as overall supply exceeded demand. 'Given global crude oil inventory is not high, the current economic slowdown will depress demand,' he said. 'So the long-term price trend is downward.' Mr Zhang said that as the Organisation of Petroleum Exporting Countries expressed its support for the US, the cartel would likely keep prices within or even lower than the US$22 to US$28 range it targeted before the attacks.