* Noble trading across the oil product barrel * Vibrant growth in Asia light distillate trade post crisis * LUKOIL and Mercuria also expanding (Recasts with more details, comments) By Seng Li Peng SINGAPORE, Feb 5 (Reuters) - Oil trading houses and majors are further expanding Asian trade operations, led by Noble Group, Russia's LUKOIL and Mercuria, as the oil industry steadily recovers from the financial crisis, trade sources said on Friday. The expansion is largely seen in naphtha and gasoline markets -- smaller than mid-distillates and fuel oil, but with room to grow -- especially since naphtha has been strong in the fourth quarter on Chinese demand. Slower demand from this month has not dented confidence, as cracking capacities are added across Asia. Hong Kong-based Noble will start a naphtha trading desk in Singapore around the second quarter, completing its plans to trade across the product barrel from the Asian oil hub, the sources said. Mercuria has started a gasoline trading desk in the city-state for the first-time, while LUKOIL has added one more naphtha trader. Singapore-listed Noble has over the past year launched oil products trading in Asia, starting with fuel oil, followed by gasoline and middle distillates. Its entry into naphtha trading, involving swaps and physicals, is in line with Noble's strategy to grow its energy business into a global entity. "Noble has been looking for a naphtha trader for a long time," one source said. Sources said Noble hired G.M. Park, a Singapore-based trader from South Korea's SK Energy, to spearhead the light fuel business. "But naphtha is not at all an easy business," said another trader, referring to recent events in the sector. European trader Projector folded its product trading business, including naphtha in 2008, due to credit issues. Japan's Mitsui Oil Asia (MOA) exited the naphtha market in 2007, after a trader chalked up $81 million in trading losses. "Most new start-ups take a while to become competitive, with the exception of Sempra, which started up fast and aggressive, and they needed only two years (to establish themselves)," another trader said. "The position that Noble can take are all spots, where you buy high. They will need time to be able to set up contracts with term sellers." BEARISH MARKET SEEN AS A PAUSE Naphtha sentiment has recently been hit by falling demand due to heavy cracker maintenance slated for this year, after the rally between November and end-January led by a boom in China's petrochemical industry. Cracks, premiums obtained from refining Brent crude into naphtha, were at their lowest on Tuesday around $126.75 a tonne, before recovering to a week's high on Thursday at $151.90. Other traders have jumped into trading naphtha over the past year, lured by ongoing additional cracking capacities from China to South Korea and Taiwan. Liquidity in the Singapore physical market has risen steadily despite the departure of Mitsui Oil Asia, which used to be one of the biggest players. Physical naphtha volumes traded on the Platts window have risen to around 475,000 tonnes in January 2010, versus 225,000 tonnes during the same period last year. Geneva-based Mercuria Energy, which started a naphtha desk in Singapore in 2009 focused on swaps trades, will continue to keep that portion of its business, after its trader Gary Bauer left. Bauer is now with African trading house Sahara Group, while a former Barclays trader is helming Mercuria's naphtha business. Mercuria's new gasoline trading desk, which deals in paper and physical trades, is led by ex-Shell trader Julie Heng. "Their plan is to operate one lights-ends desk for the region which encompass naphtha and gasoline," said an industry source. "Having tanks in Singapore is a key component," the source said, referring to gasoline. "They are working on a number of options to support a robust long-term operation in the region." LUKOIL has hired former ENOC trader H.T. Yuen in early February, strengthening its team to three, as it aims to catch up with leaders such as Vitol, Shell and Itochu. ENOC has taken on board Shinichi Matsuda, a former Mitsui Oil & Co trader from Japan since last year. Russian trader Gunvor has also hired a naphtha trader last year, after they took onboard I.S. Ryu, formerly from South Korean trading house Hanwha. (Editing by Ramthan Hussain)

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