Japanese oil product demand resumed its downtrend in November, falling by 0.23 mb/d y/y to 3.43 mb/d, following a rare uptick in October. The weakness in demand was led by kerosene (-93 thousand b/d y/y) amid an exceptionally warm start to the winter, as November’s HDDs totalled 191 (-20% y/y). Meanwhile, fuel oil and direct crude burn were down y/y by a combined 26 thousand b/d as Kansai restarted its 870 MW Takahama 3 reactor in November after three months of maintenance. Demand for gasoline (-44 thousand b/d y/y) and diesel (-5 thousand b/d y/y) also fell, as factory orders contracted amid a slowing economy. Naphtha demand grew by 14 thousand b/d y/y, as naphtha cracking margins turned positive versus propane and hence displaced LPG demand, which fell y/y by 35 thousand b/d to 0.37 mb/d.
Refinery runs fell by 45 thousand b/d y/y in November amid weak light ends margins that led refiners to trim runs. Crude oil imports fell by 0.21 mb/d y/y to 3.12 mb/d (-6.6% y/y), as imports from Saudi Arabia decreased materially by 0.24 mb/d y/y to 1.15 mb/d, while imports from the US (+49 thousand b/d y/y) and Angola (+48 thousand b/d y/y) grew as imports from Iran fell to zero. Despite waivers, challenges regarding escrow accounts and the uncertainty around the extension of the Japanese government-backed shipping insurance protection and indemnity cover for Iranian imports are likely to continue to restrict imports from Iran. Japan was a net products importer, taking 0.18 mb/d (+0.14 mb/d y/y) due to higher imports of naphtha (+80 thousand b/d y/y) and gasoline (+24 thousand b/d y/y). Crude stocks fell m/m by 2.1 mb, but product stocks rose by 3.4 mb led by builds in naphtha and diesel.