Australian oil demand grew at the fastest pace in five months, by 63 thousand b/d y/y, to hit 1.01 mb/d in January. Demand growth was overwhelmingly led by diesel at 49 thousand b/d, as manufacturing PMI hit a five-month high of 58.7 in the month. Momentum in manufacturing appeared to pick up in Q1 18, which should be supportive of diesel demand through the quarter, with the index rising to a record of 63.1 in March, while the growth in iron ore exports (Australia’s biggest export commodity) also accelerated. Consumer spending was healthy as record vehicle sales for the month of January lifted gasoline demand higher y/y by 6 thousand b/d, while jet demand grew by 8 thousand b/d y/y. LPG demand grew for the first time in 17 months, by 2 thousand b/d y/y, but declines in fuel oil persisted for the seventh straight month.
Refinery runs grew for the third consecutive month, by 3 thousand b/d y/y to 0.50 mb/d. Crude imports were higher y/y by 29 thousand b/d despite total liquids production growing for the first time in eight months, by 25 thousand b/d y/y, led by condensate at 26 thousand b/d. Condensate production was boosted by the ramp up of Wheatstone and should be boosted further by Prelude in Q2 18 and Ichthys in June/July, both of which will also raise LPG output, by 0.4 Mtpy and 1.65 Mtpy respectively, at full production. Product imports grew by a massive 0.16 mb/d y/y to reach a 10-month high of 0.70 mb/d, led by diesel (+0.11 mb/d y/y) as imports from Japan and South Korea soared. LPG exports stayed above 50 thousand b/d for the second straight month at 53 thousand b/d (+20 thousand b/d y/y). Crude inventories drew by 0.2 mb m/m. Diesel led the m/m growth in product inventories at 2.1 mb, which offset a 0.4 mb draw in LPG.