Australia’s oil product demand fell y/y in April for the fifth straight month, by 16 thousand b/d to 1.04 mb/d. Jet demand led the decline, falling y/y by 7 thousand b/d to 0.16 mb/d, amid lower domestic passenger traffic (-0.7% y/y) and the US-China trade war weighing on air cargo traffic demand, particularly for the Asia Pacific region (-8.1% y/y). Gasoline demand fell by 2 thousand b/d y/y to 0.30 mb/d even as a weak Australian dollar boosted gasoline prices at the pump. We expect demand to remain soft throughout Q2 19 as gasoline prices reached a six-month high of 152.8 Australian cents per litre (105.0 US cents per litre) in May. Diesel demand grew by 1 thousand b/d y/y in April, but growth was capped by cyclone activity in western Australia, which inundated mining operations. We expect May demand for diesel to have risen y/y as mining operations resumed, with Chinese iron ore imports from Australia climbing m/m by 12%.
April refinery runs fell by 3 thousand b/d y/y to 0.52 mb/d, as weak margins and underinvestment in Australia’s refinery system have hindered runs. Product imports were higher y/y 4 thousand b/d to 0.65 mb/d, while crude imports fell by 59 thousand b/d to 0.34 mb/d. Gasoline imports from the Netherlands rose to their highest on record at 50 thousand b/d. Australia’s reliance on gasoline imports from Europe is set to rise in the long run as the country plans to tighten sulphur and aromatics specifications by 2022 (with further tightening possible in 2027), parallel to Euro 5 specifications. Australia’s product stocks rose m/m by 0.7 mb to 31.3 mb, while crude stocks rose m/m by 0.4 mb to 13.1 mb. Australia’s liquids output was up y/y by 75 thousand b/d at 0.35 mb/d, led by condensates.