Japan Stock Movements in July 2014

In Japan, total commercial oil stocks rose by 8.5 mb in May, following a build last month, to stand at 159.2 mb. Despite this build, Japanese oil inventories are 10.2 mb or 6.0% below what they were a year ago and 17.1 mb or 9.7% lower than the latest five-year average. Within the components, crude and products rose by 5.6 mb and 2.9 mb, respectively.

Japanese commercial crude oil stocks rose in May for the third consecutive month to stand at 96.3 mb, the highest level since July 2013. At this level, they were still 5.0 mb or 5% below a year ago at the same time and remained 7.4 mb or 7.1% below the fiveyear average. The stock build in crude oil was driven by lower crude runs, which fell by around 385,000 tb/d or 11.5%, to average nearly 3.0 mb/d, down by 4.1% from the previous year at the same time. Lower crude oil imports limited a further build in crude oil stocks. Indeed, crude oil imports fell by 262,000 b/d or 7.4% to average 3.3 mb/d. At this level, they were also 3.3% less than the same period last year. Direct crude burning in power plants declined by nearly 25% in May compared with the previous month, averaging 137 tb/d, and showing a decline of 42% over the same period a year ago.

Japan’s total product inventories rose by 2.9 mb in May for the second consecutive month to stand at 62.9 mb, which is a deficit of 5.0 mb or 7.4% compared with a year ago at the same time and 9.7 mb or 13.3% below the five-year average. The fall of domestic oil sales was behind the build in product inventories. Indeed, Japanese oil product sales fell by almost 195,000 b/d to average 2.8 mb/d in May and stood at 4.4% below a year earlier at the same period. Within products, with the exception of gasoline, all other products witnessed a stock build.

Gasoline stocks fell by 0.5 mb in May, reversing the build of last month, to stand at 12.3 mb, which is 1.9 mb or 13.5% less than the same time the previous year and 2.1 mb or 14.6.% below the five-year average. Higher domestic sales, which increased by 8.1%, combined with lower production, declining by 4.3%, was behind the stock draw.

Distillate stocks rose by 2.3 mb in May for the second consecutive month. At 26.3 mb, distillate stocks are 1.1 mb or 4.1% below the same period a year ago and 4.0 mb or 13.2% lower than the seasonal average. All distillate components saw a build in May. Jet fuel inventories rose by 5.4% on the back of weaker domestic sales, which fell by almost 17% in May compared to the previous month. Kerosene stocks rose by 5.4%, driven by lower domestic sales, which declined by 23%. Gasoil inventories went up by 16.7% on the back of a decline of 6% in production.

Total residual fuel oil stocks rose by 0.3 mb to end the month of May at 15.5 mb, which is 0.2 mb or 1.5% less than a year ago and 1.6 mb or 9.4% lower than the latest five-year average. Within fuel oil components, fuel oil A stocks fell by 0.9%, while fuel oil B.C stocks increased by 2.8%. The fall in residual oil A was driven by lower output, while the build in fuel oil B.C could be attributed to lower domestic sales.

Naphtha stocks also rose by 0.8 mb, finishing the month of April at 8.8 mb, still indicating a deficit of 2.2 mb or 20.1% compared with a year ago and 2.0 mb or 18.3% below the seasonal norm. The stock build came from lower domestic sales, which fell by nearly 10%.