Extract from demand:
European oil demand continued to fall y/y in March, by 0.72 mb/d to 14.5 mb/d, the second straight month of declines after a rebound in January. Final numbers will likely be revised higher, based on the recent trend for revisions, as German demand has routinely been revised up. February demand was revised higher by 0.15 mb/d, as German demand was raised. In March, declines were broad-based, with EU-5 demand lower y/y by 0.57 mb/d. Demand in peripheral Europe also suffered, falling y/y by 47 thousand b/d, while Turkish demand was down by 0.11 mb/d y/y. Overall demand in Q1 19 was lower y/y by 0.23 mb/d (EU-5 lower by 0.19 mb/d), following on from a weak end to 2018 as economic activity decelerated, with strong declines in diesel and LPG demand, while gasoline’s strength also faded. Demand was also weighed down by warmer-than-usual weather across February and March, although April was colder. In Germany and France, HDDs were 31% and 27% lower y/y respectively across February and March, but 53% and 37% higher respectively across April, although heating demand is less intense anyway by Q2 19. Preliminary data for April are yet to be released but with Easter falling later this year, demand was likely lower y/y.
Extract from refinery runs:
Even though planned offline CDU capacity falls in May, contamination of Urals crude along the Druzhba pipeline, which started in the Samara region of Russia, has weighed on European runs this month too after high levels of organic chloride were reported from 19 April and pipeline were flows halted from 25 April. Many refineries have turned to sourcing waterborne barrels via Gdansk and Rostock. With both the northern and southern Druzhba still blocked, the issue is still far from resolved. In Germany and Poland, the 0.22 mb/d Schwedt and the 0.36 mb/d Plock refineries have been running at lower utilisation rates since 25 April. Schwedt was running at 30% capacity as of early May while the 0.24 mb/d Leuna refinery has declared force majeure on rail deliveries of oil products from 15 May until at least 26 May, as a technical issue closed all of the plant’s production units. Issues are also spreading beyond the refineries directly fed by the pipeline, with more and more refiners that receive seaborne crude from Ust-Luga (the bulk of which goes into ARA, Poland, Sweden and Finland) reporting problems. Both BP’s Rotterdam and Gunvor’s Europoort refineries have reportedly shut down part of their crude distillation capacity. As a result of these outages, making up supply losses with imports would require shipments of at least 0.6 Mt of diesel, equivalent to around 20% of the 3 Mt of diesel being tracked for delivery to Europe this month, suggesting European diesel stocks could easily decline by 4-5 mb this month alone due to the Urals contamination issue.