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Australia’s oil product demand fell y/y for a third straight month in February, by 19 thousand b/d y/y to 1.06 mb/d, with warm weather weighing on activity. Gasoline demand dropped by 11 thousand b/d y/y to 0.31 mb/d, despite average gasoline prices in Q1 19 falling to their lowest since Q3 17 at AUD$1.43 per litre (-7.5% q/q). February was the fourth-warmest February on record, at 1.4°C above seasonal average, likely weighing on kilometres driven. March temperatures were the warmest on record, at 2.1°C above the seasonal average. Diesel demand was down y/y in February, for the first time in 14 months, by 6 thousand b/d to 0.50 mb/d, as weak iron ore exports to China due to high inventories at Chinese ports weighed on Australia’s mining sector. Jet fuel demand remained unchanged on the year at 0.16 mb/d despite a 1.4% y/y increase in tourism arrivals, rising to 0.93 million visitors.
February refinery runs rose by 14 thousand b/d y/y to 0.52 mb/d, supported by improving middle distillate cracks, though cracks remained lower y/y, according to Australian refinery Caltex, averaging $7 per barrel in January-February (-$2.38 per barrel y/y). Product imports fell by 92 thousand b/d y/y to 0.58 mb/d, led by jet, down y/y by 45 thousand b/d to 76 thousand b/d. Nonetheless, Australia’s products stocks grew m/m by 0.2 mb to 29.4 mb, again led by jet, up from a downwardly revised January stock level (29.2 mb). Forward cover is still markedly below the IEA’s 90-day rule, though Australia is pushing for the IEA to include defence stocks in its calculations as well. Total liquids production rose to 0.33 mb/d (+46 thousand b/d y/y), led by condensate, pushing crude and condensate stocks higher m/m by 0.9 mb.