Japanese oil demand contracted for the 13th consecutive month, albeit by just 79 thousand b/d y/y, the smallest decline over this period, to 3.4 mb/d in October. Transportation fuels fared well—gasoline demand was up marginally by 1 thousand b/d y/y and jet demand was up by 13 thousand b/d y/y—as did petrochemical feedstock where LPG demand grew y/y for the fourth straight month, higher y/y by 51 thousand b/d. Naphtha demand, however, has contracted y/y in as many months and was down again in October by 37 thousand b/d y/y. Diesel declined in October, contracting by 24 thousand b/d y/y despite manufacturing PMI expanding at the fastest pace in nine months, at 51.4, having contracted in six out of the last 10 months this year. Demand for kerosene and fuel oil was down by 2 thousand b/d and 4 thousand b/d y/y respectively due to broadly normal temperatures in October, but heating demand for both fuels will pick up in November with snowfall arriving heavier and earlier than usual this year, especially as nuclear generation is hobbled through the winter.
Refinery runs fell by 0.12 mb/d y/y to a 16-month low of 2.92 mb/d due to refinery maintenance which reduced 0.68 mb/d of CDU capacity (higher y/y by 0.23 mb/d). Runs will pick up in November, with CDU maintenance pegged at 0.3 mb/d. Crude imports fell by 67 thousand b/d y/y as growth in Middle Eastern crudes (Saudi +0.21 mb/d y/y, Iran +49 thousand b/d y/y) were offset by huge declines from FSU (-0.23 mb/d y/y). Crude inventories have climbed over the past two months to 92.5 mb in October after hitting a 16-month low in August. Product inventories fell m/m by 3.4 mb with gasoline, naphtha, kerosene and fuel oil all falling below year-ago levels. Gasoline inventories in particular have fallen to a 22-month low of 9.7 mb.