Japanese oil demand fell by 65 thousand b/d y/y to 3.22 mb/d in August. Lower petrochemical demand for naphtha (-55 thousand b/d y/y) due to heavy cracker maintenance, which will last through September and ease from October onwards, offset higher utility demand for kerosene (+2 thousand b/d y/y), fuel oil (+9 thousand b/d y/y) and direct crude burn (+4 thousand b/d y/y) due to an unusually hot summer this year (CDDs were 28% higher y/y over June to August). Annual declines in fuel oil demand will resume this autumn with the return of Kansai’s Takahama 4 reactor on 31 August, which took the number of online nuclear reactors to seven, the highest since the Fukushima Daiichi nuclear disaster in 2011. This could rise to eight as early as 1 October after the Hiroshima High Court removed a temporary injunction against Shikoku’s Ikata 3 reactor. LPG demand was down by 36 thousand b/d y/y due to weaker residential demand.
Refinery runs fell by 0.11 mb/d y/y to 3.25 mb/d. Crude imports grew y/y for the first time in three months, by 0.19 mb/d, led by higher imports from the UAE (+0.12 mb/d) and Qatar (+0.11 mb/d) which offset lower imports from Saudi Arabia (-0.19 mb/d). Although lower y/y, having dropped below 1 mb/d over June and July, imports from Saudi climbed m/m to 1.2 mb/d, with some of this heading into Aramco’s storage in Okinawa. Iranian imports grew y/y by 70 thousand b/d but weakened m/m to 0.18 mb/d. Japan was a net products exporter at 5 thousand b/d (-79 thousand b/d y/y) on higher imports of fuel oil (+73 thousand b/d y/y). Crude inventories rose m/m by 3.6 mb from July’s record lows and product inventories grew by 6.8 mb, led by LPG (+2.6 mb) and kerosene (+2.6 mb).