 In May, commercial oil stocks in Japan rose for the third consecutive month, by 6.4 mb to stand at 179.1 mb, the highest level since May 2011. With this build, they reduced the deficit with a year ago to 0.7% from 4.6% a month earlier. This build also helped switch the deficit with the five-year average to a surplus of 0.4%.The total stockbuild was divided between crude and products, as they rose by 4.0 mb and 2.1 mb respectively.
Japanese commercial crude oil stocks grew further in May, increasing by 4.0 mb to stand at = 107.5 mb. At this level, they showed a surplus of 0.8 mb or 0.7% on the same time last year and remained 3.4 mb or 3.2% above the seasonal average. This build came mainly from lower crude throughput, which declined by 377,000 b/d or 10.7% to an average of 3.2 mb/d. However, this level was still 8.6% above that of the same time a year ago. Refineries in Japan were running at 70.4%, which was 8.4 pp lower than in the previous month, but much higher — 7.6 pp — than the same period last year. The build in crude oil stocks came despite lower crude imports in May; these declined by around 360,000 b/d or 9.1%, to stand at 3.6 mb/d. But this level rose by 10.2% year-onyear. It should be highlighted that direct crude burning in power plants continued to spike, averaging 308,000 b/d, more than the level in May 2011.
Japan’s total product inventories rose for the second consecutive month, by 2.4 mb, to end May at 71.6 mb, the highest level since November. Despite this build, they remained 2.1 mb or 2.8% below the same period the previous year and 2.7 mb or 3.6% lower than the seasonal average. This stock-build for total products came on the back of weaker domestic product sales, which declined by about 90,000 b/d or 2.8% to average 3.1 mb/d. But, at this level, Japanese demand was 9.7% higher than a year earlier and saw the sixth straight month of gains, supported by strong demand for power-generation. With the exception of distillates, which saw a build, all products remained almost unchanged. Distillate stocks rose for the second month running, by 2.5 mb, to end May at 29.7 mb, the highest level since the beginning this year. At this level, they still showed a deficit of 3.1 mb or 9.4%, compared with a year ago, and were 0.6 mb or 1.9% below the five-year average. All components of distillates experienced a build, with the biggest attributed to kerosene, which increased by 16.6%, followed by jet fuel and gasoil, with rises of 5.9% and 3.8% respectively. The build in kerosene stocks came mainly on the back of lower domestic sales, which declined by almost a half.
Higher exports, combined with increasing output, were behind the build in jet fuel and gasoil stocks. Gasoline stocks remained unchanged in May, ending the month at 14.1 mb and leaving them 0.7 mb or 5.1% above the level of the same time a year ago; but they were still 0.3 mb or 2.1% below the seasonal average. Higher production, along with healthy imports, offset the increase in gasoline demand, leading to a stable level of gasoline stocks.
Residual fuel oil stocks saw a minor drop in May, reversing the build of last month to stand at 16.8 mb. At this level, they were 0.3 mb or 1.8% below the same period a year ago and 1.5 mb or 8.2% below the five-year average. Within the components of fuel oil, fuel oil A saw a drop of 1.4%, while fuel oil B.C stocks declined by 0.6%. Domestic sales of B.C fuel oil, which is mostly used for power utilities, jumped by 68.8% in May from a year ago, since all the country’s nuclear plants had been shut down by early May last year. However, domestic sales remained almost at the same level as a month earlier. Naphtha inventories remained unchanged in May from a month earlier and ended the month at 10.9 mb. At this level, they were 0.8 mb or 0.7% above the same period a year ago, but 0.6 mb or 2.8% below the seasonal average.
Singapore and Amsterdam-Rotterdam-Antwerp (ARA) At the end of May, product stocks in Singapore fell for the third consecutive month, by 0.5 mb, to end the month at 38.0 mb. With this drop, they were 5.3 mb or 12.1% below the same time a year ago. Within products, the picture was mixed; middle and light distillates saw a drop, while fuel oil stocks increased. At 8.9 mb, light distillate stocks ended May 1.5 mb lower than in the previous month, representing a deficit of 1.3 mb or 13.0% on the same period a year ago. Higher exports to Vietnam were behind the drop. In fact, Vietnam is seeking cargos to plug the domestic supply shortfall, because the country has yet to restart its only refinery. Middle distillate stocks finished May at 8.8 mb, which was 0.1 mb lower than the previous month, standing at 3.8 mb or 30.1% below the same period the year before. Healthy demand for diesel, especially from Australia and Malaysia, was among the factors behind the draw-down of middle distillate stocks. An increase in imports from South Korea limited the decline in stocks. Fuel oil stocks reversed the stock-draw of last month and rose by 1.0 mb, ending May at 20.3 mb. At this level, they were almost at the same level as last year. Higher Western arrivals to Singapore were behind the build in fuel oil inventories. It was reported that May’s inflow from the West reached about four million tonnes.
Product stocks in ARA at the end of May fell slightly by 0.2 mb, ending the month at 31.0 mb, the lowest level since the end of last year. With this draw, they stood at 8.1 mb or 20.7% below last year’s level in the same period. Within products, gasoline, naphtha and fuel oil saw builds, while gasoil and jet fuel oil witnessed declines. Gasoline stocks rose by 0.5 mb to 5.8 mb, leaving them 0.8 mb or 16.3% above a year ago. The build in gasoline came as refineries continued to return from maintenance, amid weak demand. Naphtha inventories saw a build of 0.3 mb, ending May at 1.2 mb and leaving them nearly 40% above what they were at the same time a year ago. This build could be attributed to the poor economic outlook, and the availability of much cheaper feedstock alternatives continued to suppress demand from petrochemical end-users. Fuel oil stocks increased by 0.9 mb in May to stand at 4.7 mb.
Despite this build, they remained almost 10% below the same time last year. Higher fuel oil imports outpacing exports lay behind the build in fuel oil inventories. Gasoil stocks fell for the second consecutive month, by 0.9 mb, ending May at 16.9 mb, the lowest level since the end of last year. The gasoil forward curve was in backwardation, making storage unprofitable, and there was no incentive to store gasoil products. Jet fuel stocks also fell, by 0.9 mb, to stand at 2.3 mb and they remained almost 40% below last year’s level at the same time. The drop in jet fuel oil stocks came on the back of lower imports.
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