European February oil demand rose by 0.12 mb/d y/y to 15.16 mb/d, with growth rates easing from January’s 0.54 mb/d. Peripheral Europe and Turkey contributed to nearly 0.13 mb/d of growth, while Euro-5 demand fell y/y by 12 thousand b/d, the first decline since September 2016, dragged sharply lower by weak UK demand (-91 thousand b/d y/y)—although this is likely to be revised higher given almost all the decline is in kerosene, which tends to be subject to large revisions. German demand rose by 20 thousand b/d despite consumers continuing to destock (total German diesel stocks fell by 2.5 mb m/m and have moved lower y/y), limiting end-user buying and dragging German diesel demand lower y/y by 14 thousand b/d. But naphtha demand recovered as BASF’s Ludwigshafen complex ramped back up and as expensive LPG and strong co-products enticed petrochemical plants to switch to naphtha. In fact, European LPG demand fell y/y by 95 thousand b/d, the first decline since June 2016, with 4% fewer HDDs also weighing. Diesel demand rose by 0.16 mb/d, with the bulk of the increase in on-road diesel, supported by stellar economic activity (and buoyant auto sales, which rose by 6.2% y/y in the first two months of the year). Markit’s composite index for the Eurozone rose to 56.4 in March, which, combined with the previous two readings, suggest the currency area enjoyed its strongest quarter of growth since 2011. Thus, end user buying should remain strong through Q2 17 and Q3 17.
European refinery runs totalled 12.92 mb/d, lower m/m by just 33 thousand b/d and higher y/y by 0.54 mb/d, despite spring works peaking at nearly 1.8 mb/d as strong refining margins pushed utilisation at those plants that were not down for work higher. Nonetheless, strong demand helped draw down products stocks, with gasoline falling by 2.2 mb and diesel by 2 mb.