European March oil demand was flat y/y at 14.9 mb/d, the second consecutive month of weakness. Q1 17 demand was trimmed lower, due to sizeable downward revisions to data in Germany, Turkey and Norway. Turkey (-0.15 mb/d y/y), Belgium (-59 thousand b/d y/y) and Germany (-43 thousand b/d y/y) led the declines in March. Turkish demand was pulled down by weak economic data and the sluggish lira weighing on auto sales. Peripheral Europe, however, continued to grow strongly, by 0.23 mb/d, led by Norway, Czech Republic and Estonia. Euro-5 demand fell y/y for the second straight month, by 76 thousand b/d, with Italy the only source of growth at 43 thousand b/d, and French demand steady. But much like February, we expect UK demand to be revised higher, especially amidst strong economic data, and helped by frontloaded auto sales, before the new vehicle excise duty (VED) rates came into effect in April. The weakness in German demand has largely been led by heating oil due to destocking, rather than on-road diesel. Indeed, final data for February show a 0.13 mb/d y/y decline in heating oil demand vs a 4% y/y rise in on-road diesel to 0.76 mb/d. Anecdotal reports suggest strong German buying at present, and we expect European demand to be strong in the summer.
European refinery runs totalled 12.4 mb/d, lower m/m, but were higher y/y by 0.32 mb/d—despite 1.9 mb/d of turnarounds, which were higher y/y by 0.5 mb/d. Runs were supported by higher utilisation rates at refineries that were not down for works. Maintenance work remained heavy through mid-May. Still, with the exception of a small build in jet, product stocks drew. Gasoline inventories fell by 1.5 mb and diesel by 2.5 mb. Stocks continued to draw as of May.