Extract from demand:
European oil demand continued to decline, falling y/y by 0.46 mb/d to 15.24 mb/d in June and by 0.15 mb/d y/y across Q2 19. Demand dropped y/y in June across most of the EU-5 countries, except for Germany (+6 thousand b/d y/y). Italy (-0.10 mb/d y/y) led the declines as an uncertain fiscal outlook dented investment and domestic demand. EU-5 final numbers will likely be revised higher, as German demand has routinely been revised up. Indeed, European demand for May was revised up by a whopping 0.41 mb/d to show a y/y decline of just 0.26 mb/d, compared to previous estimates of a 0.67 mb/d decline. Additionally, April demand was revised upwards again, this time by 0.1 mb/d, to 15.43 mb/d, following a 0.2 mb/d uplift last month. June demand outside the EU-5 fell by 0.16 mb/d y/y, while Turkish demand was down by 53 thousand b/d y/y.
Extract from refinery runs:
Refinery runs rose by 43 thousand b/d m/m to 12.28 mb/d in June but came in lower y/y by 0.38 mb/d, the sharpest annual decline since November 2018 as CDU maintenance rose by 0.92 mb/d y/y to 1.64 mb/d (+0.1 mb/d m/m). Europe’s refining sector continued to feel the impact of the contamination of Druzhba flows, with deep run cuts at PCK’s 0.22 mb/d Schwedt and Total’s 0.24 mb/d Leuna refineries lasting through June. We expect refinery runs to average 13.17 mb/d across Q3 19, up by 0.79 mb/d q/q, as refining margins have improved and the Urals flows to affected refineries have resumed at close to 1 mb/d since July.
European refiners jumped at the opportunity to send gasoline across the Atlantic following a series of refinery disruptions across key producing areas of the US, which tightened octane availability on the US East Coast. Of the 1.03 mb/d of gasoline blending components imported into the US (+0.18 mb/d y/y) in May, 0.57 mb/d came from Europe (+0.13 mb/d y/y). Both figures mark the highest readings on our records dating back to 2010. We expect hefty imports to have lasted through the summer amid the loss of refining capacity on the USEC due to the shutdown of the 0.35 mb/d Philadelphia refinery. Heavy exports tightened Europe’s octane balance, weighing on exports in early August.