Japan Stock Movements in July 2012

Source: OPEC 9/6/2012, Location: Europe

In June, commercial oil stocks in Japan rose for the fourth consecutive month, by 0.5 mb to stand at 177.5 mb, the highest level since October. With this build, they switched the deficit with a year ago a month earlier to a surplus of 1.6 mb or 0.9%. This build also helped change the deficit with the five-year average into a surplus of 1.1 mb or 0.6%. The total stock-build came from products, as they increased by 1.3 mb, while crude stocks countered this build and decreased by 0.9 mb.

Japanese commercial crude oil stocks reversed the build of the last three months and fell by 0.9 mb, ending June at 106.6 mb. Despite this drop, they remained at 3.2 mb or 2.1% above the same time a year ago and showed a surplus of 2.1 mb or 2.0% on the seasonal average. The drop in crude oil stocks came mainly from lower imports, which declined by 344,000 b/d or 9.6% to an average of 3.2 mb/d. However, this level was still 6.0% above that of the same time a year ago. This stock-draw came despite lower refinery runs averaging 3.1 mb/d, around 100,000 b/d lower than the previous month; but they remained 0.8% higher than the same period last year. In June, refineries were running at 68.0%, which was 2.4 pp lower than in the previous month, but 2.6 pp higher than the same period last year. It should be highlighted that direct crude burning in power plants in June eased from the previous month, when they declined by 24% to stand at 234,400 b/d, but they remained 72% higher than the level of June 2011.

Japan’s total product inventories rose for the third consecutive month, by 1.3 mb, to end June at 70.8 mb, the highest level since the beginning of this year. Despite this build, they remained 1.7 mb or 2.3% below the same period the previous year and 1.0 mb or 1.4% lower than the seasonal average. This stock-build for total products came on the back of weaker domestic product sales, which declined by about 50,000 b/d or 1.7% to average 3.0 mb/d. But, at this level, Japanese demand was still 2.5% higher than a year earlier and showed the seventh straight month of year-on-year gains, driven by higher fuel oil sales used for power-generation. Within the products, the picture was mixed; gasoline and fuel oil stocks experienced drops, while distillates and naphtha saw builds. Gasoline stocks fell by 0.5 mb, ending June at 13.6 mb. At this level, they were 1.0 mb or 7.8% higher than a year ago at the same time, representing a surplus of 0.3 mb or 2.3% on the seasonal average.

The fall in gasoline stocks could be attributed to lower production, as they declined by 6.1%. Lower domestic sales limited the fall in gasoline stocks. Residual fuel oil stocks also dropped for the second consecutive month in June, by 0.6 mb to stand at 16.2 mb. At this level, they were 0.7 mb or 4.1% below the same period a year ago and 1.2 mb or 7.1% below the five-year average. Within the components of fuel oil, fuel oil A saw a drop of 4.6%, while fuel oil B.C stocks declined by 3.5%. Domestic sales of B.C fuel oil, which is used partly for power utilities, jumped by 43.9% in June from a year ago.

However, domestic sales remained almost at the same level as a month earlier. Fuel oil A domestic sales were also higher, but to a lesser degree, as they increased by 4.1% from the same month last year. Distillate stocks rose for the third month running, by 0.3 mb, to end June at 30.0 mb, the highest level since the beginning of this year. Despite this build, they still showed a deficit of 2.1 mb or 6.6%, compared with a year ago, and were 0.2 mb or 0.7% below the five-year average. Within the components of distillates, jet fuel and kerosene saw builds, while gasoil stocks experienced a drop.

Jet fuel inventories rose by 5.7%, driven by higher production as they increased by 4.3%, combined with lower domestic sales, declining by around 12%. Kerosene stocks rose by 2.8%, supported by lower demand, as they decreased by about 1%, while the stockdraw of 3.8% in gasoil came from higher domestic sales combined with relatively healthy exports. Naphtha inventories rose by 2.3 mb in June from a month earlier and ended the month at 11.1 mb, the highest level since October. At this level, they turned the deficit with a year ago in the previous month into a surplus of 1.4%. This build also helped change the deficit with the five-year average to a surplus of 1.0%. The build in naphtha stocks came on the back of lower domestic sales, as they declined by 9.6% from a month early. Higher imports, which increased by about 15%, also helped the build in naphtha stocks.


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