11
pages
0.36Mb
Extract from demand:
European oil demand fell y/y by 0.55 mb/d to 15.71 mb/d in September, led again by a decline in German demand (-0.37 mb/d y/y) that took EU-5 demand lower y/y by 0.48 mb/d. August European demand was revised up by 0.21 mb/d, now showing a y/y expansion of 56 thousand b/d instead of a 0.15 mb/d decline. While September demand will likely get revised higher in keeping with recent trends, high flat price during the month led to massive destocking by end-users, so reported demand was undoubtedly weak. In the year-to-September, European demand has totalled 15.42 mb/d, lower y/y by 50 thousand b/d (prior to any September revisions), with the main drag being diesel.
German diesel demand was weak once again in September, dropping by 0.13 mb/d y/y. French demand fell by 0.15 mb/d, with diesel falling by 0.13 mb/d, coinciding with the rally that took Brent crude to nearly $85 per barrel. Demand for diesel this summer in Europe was poor in many important markets. German demand, for instance, fell y/y in all but one of the first eight months of 2018, and French demand was anaemic as well this summer. For the most part, weakness in heating oil sales was the major factor behind the declines, though soft agricultural demand due to the scorching summer—as well as the contraction in the German economy in Q3 18 due to falling exports—also affected on-road diesel demand. With more German cities banning old diesel car usage, the medium-term outlook for on-road diesel will stay challenged even though trucking demand remains strong.
Extract from refinery runs and stocks:
Refinery runs fell m/m by 0.56 mb/d to 13.12 mb/d in September, in line with our estimates, lower y/y by 0.27 mb/d. Runs fell as CDU maintenance rose by 0.86 mb/d m/m to 1.20 mb/d, with key units offline—including those at the Rotterdam, Gelsenkirchen and Holborn refineries. CDU outages rose to 1.70 mb/d in October (+0.56 mb/d y/y) and remain high at 1.39 mb/d in November (+0.78 mb/d y/y).
European diesel stocks fell by 2.7 mb to below 428 mb in September, lower y/y by 21 mb. Stocks at ARA fell sharply over October and continued falling in November, although stocks are still higher y/y on some accounts. That said, the strength in the cash market suggests that at the prompt, whatever supplies are available are controlled by players who need the supply to fill their own systems. Imports will need to rise soon for ARA stocks to stabilise by early December. Gasoline stocks fell for the seventh straight month, by 0.71 mb in September.
