In July, commercial oil stocks in Japan rose for the fifth consecutive month, up 0.9 mb, to stand at 178.3 mb, the highest level since May 2011. With this build, inventories are at 0.6 mb or 0.4% above a year ago, but remain at a deficit of 4.0 mb or 2.2% with the five-year average. The total stock-build came from products, which increased by 3.0 mb, while crude stocks countered this build, declining by 2.2 mb.
Japanese commercial crude oil stocks fell by 2.2 mb for the second consecutive month to end July at 104.4 mb. With this drop, inventories are at 2.8 mb or 2.6% below the seasonal average, but in line with the level of a year ago. The drop in crude oil stocks was due mainly from higher crude throughput which increased by around 280,000 b/d or 9.1% over the previous month to average 3.3 mb/d, but remained 0.3% below a year ago.
In July, Japan’s refineries were running at 74.3%, which was 6.3 pp higher than in the previous month, and 2.1 pp higher than in the same period last year. It should be highlighted that direct crude burning in power plants in July continued its downward trend, declining by 28.2% from the previous month to stand at 168,300 b/d, but 11.6% above the level of June 2011. The crude stock-draw in July came despite higher imports, which averaged 3.4 mb/d, around 200,000 b/d or 6% higher than the previous month, 0.3% below the same period last year.
Japan’s total product inventories rose for the fourth consecutive month, by 3.0 mb, to end July at 73.8 mb, the highest level since November 2011. With this build, inventories reversed the deficit with a year ago to show a surplus of 0.7 mb or 0.9%.
However, product stocks remained at 1.2 mb or 1.5% below the seasonal average. This stockbuild for total products came on higher product output, reflecting improved refinery utilization rates. Increased product imports also contributed to the build in product inventories. Indeed, product imports in July rose nearly 30,000 tb/d from the previous month to average 656,000 tb/d. Healthy oil product sales in July limited the build of refiner’s product stocks. In fact, Japan’s oil product sales rose by 200,000 tb/d or 6.7% from the previous month to average 3.2 mb/d and stood at 1.7% above the same level a year earlier.
This represents the eighth straight month of gains, driven by increased burning of fuel oil as most nuclear power plants remain closed. With the exception of naphtha, which remained unchanged, all other product stocks increased. Gasoline stocks rose by 0.5 mb, ending July at 14.1 mb. At this level, gasoline stocks were 1.4 mb or 10.7% higher than a year ago, representing a surplus of 1.7 mb or 13.5% with the seasonal average.
The build in gasoline stocks could be attributed to higher production, which increased by 16.3%. An increase of gasoline imports of nearly 7.0% also contributed to the build in gasoline stocks. However, healthy domestic sales limited the build in gasoline inventories. Residual fuel oil stocks also increased in July by 1.2 mb to stand at 17.3 mb, the highest level since September 2011. At this level, they were 1.0 mb or 6.2% above the same period a year ago and in line with the five-year average. Within the components of fuel oil, fuel oil A saw a build of 1.2%, while fuel oil B.C stocks rose by 10.3%. Higher output, combined with increased imports, were behind the build in both components of fuel oil stocks. However, healthy domestic sales of B.C fuel oil, which increased by 13.6% in July from a month earlier, has limited this build. Distillate stocks rose for the fourth month running, up 1.4 mb, to end July at 31.3 mb, the highest level since the beginning of this year.
Despite this build, they still showed a deficit of 2.2 mb or 5.7%, compared with a year ago, and were 2.1 mb or 6.4% below the five-year average. Within distillate components, kerosene and gasoil saw builds, while jet fuel stocks experienced a drop. Jet fuel inventories fell by 11.0%, driven by higher domestic sales which increased by 9.7%, combined with lower production, which fell by 4.3%. Kerosene stocks rose by 13.9%, supported by a huge jump in output, which increased by 28.5%. Gasoil stocks also rose by 2.3% in July, driven by a 7% increase in production. Higher domestic sales, which rose by 6.6%, have limited the build in gasoil stocks. Naphtha inventories remained unchanged in July compared to the previous month, ending the month at 11.1 mb, the highest level since October 2011. At this level, naphtha stocks remained at 0.2 mb or 1.6% above a year ago, but were in line with the five-year average.