European oil consumption dropped by 0.27 mb/d y/y in June to 15.72 mb/d, led by a 0.13 mb/d y/y decline in German demand that dragged EU-5 demand lower by 0.32 mb/d. May demand was revised higher by 0.1 mb/d with y/y declines now at 0.34 mb/d, led by German data being revised higher as expected. We also expect German demand data for June to be revised higher. UK demand fell by a sharp 0.1 mb/d led by diesel, while Italian and Spanish demand both fell y/y too after six straight months of growth. French demand fell y/y for the second straight month, but preliminary July data show a substantial recovery. Across H1 18, European demand averaged 15.26 mb/d, higher y/y by 51 thousand b/d, even with EU-5 demand 67 thousand b/d lower y/y.
European refinery runs climbed by 0.41 mb/d m/m to 12.66 mb/d in June as maintenance eased from peak levels (-1.15 mb/d m/m), but runs were still lower y/y by 0.23 mb/d. Notable maintenance in June included 0.15 mb/d of CDU capacity at Repsol’s Tarragona refinery in Spain and the 0.10 mb/d CDU at Eni’s Taranto refinery in Italy. Since July, however, hot weather in Europe has played havoc with refinery operations by straining power grids and reducing the effectiveness of refinery cooling systems. Several European refineries were forced to limit their discharges of used cooling water into lakes and rivers amid fears of increasing already abnormally high water temperatures. We estimate that some European refineries may have cut runs by up to 10%. German refiners have confirmed that output fell by a lower 3% nationwide, as some plants have avoided cooling issues. Overall, we think European runs may have fallen by as much as 0.6 mb/d from planned levels in certain weeks across July and August. Planned maintenance picks up in September and October.