Extract from demand:
European oil demand was slightly lower y/y by 34 thousand b/d at 15.73 mb/d in October. Still, EU-5 demand was higher y/y by 5 thousand b/d, the first expansion since April, and was led by France, where demand jumped by 0.15 mb/d y/y. Germany was the laggard once again, falling by 0.29 mb/d, with final versions likely to show declines of around 0.24 mb/d as per recent trends. With diesel up strongly, it was naphtha that dragged overall demand lower, falling y/y at a record pace of 0.37 mb/d. While y/y declines were expected given that offline daily ethylene production capacity was higher y/y by 0.1 Mtpy and as naphtha was the preferred feedstock for crackers last year versus LPG this year, the scale of the fall has surpassed our expectations, especially as LPG demand was also lower y/y, albeit by a much shallower 5 thousand b/d.
Extract from refinery runs and stocks:
Refinery runs fell m/m by 0.38 mb/d to 13.50 mb/d in October, lower y/y by 0.63 mb/d. Heavy CDU maintenance weighed on runs, with 1.7 mb/d of capacity offline across the region (+0.56 mb/d y/y). German runs remained low at 1.51 mbd in October (-0.48 mb/d y/y), the lowest on our records dating back to 2002, in part due to very low Rhine water levels that led to releases of strategic German product stocks. Meanwhile, inland stocks in Germany were stretched by unplanned outages at the 0.21 mb/d Schwedt and 0.12 mb/d Vohburg refineries in October. November European runs likely remained depressed, with CDU outages at similar levels, 1.1 mb/d higher y/y. Heavy TARs were led by Italy (+0.1 mb/d m/m), where maintenance at Lukoil’s Isab Nord refinery took 0.22 mb/d of CDU capacity offline. In Portugal, works were 80 thousand b/d heavier m/m, driven by work at Galp’s 0.22 mb/d Sines plant, which resumed operations early this month. We expect European runs to average 12.4 mb/d (-0.2 mb/d y/y) in Q1 19.