Japan’s oil demand continued to contract in April, lower by 0.18 mb/d y/y to 3.58 mb/d. Again, the decline was led by the power sector, with direct crude burn and fuel oil demand falling y/y by 80 thousand b/d and 70 thousand b/d respectively. Milder temperatures (HDDs were lower by 9 days y/y) and efficiency gains led to power demand declining by 2.6% y/y in April. Non-power oil use declined y/y by 33 thousand b/d with demand contracting across the barrel except for LPG, which posted its first growth (18 thousand b/d y/y) since September 2014. Diesel demand fell y/y by 17 thousand b/d to 0.56 mb/d, in line with April manufacturing PMI which plunged to 48.2 (the weakest since January 2013) after earthquakes disrupted production in the manufacturing hub of Kumamoto. Gasoline demand declined y/y by 15 thousand b/d despite passenger car sales posting the first growth in 16 months in April. Jet/kerosene demand fell by 14 thousand b/d y/y while naphtha demand declines narrowed to 6 thousand b/d y/y as Tosoh Yokkaichi completed its planned maintenance by mid-April.
Refinery runs posted another rare 76 thousand b/d y/y increase in April, to 3.42 mb/d, as refineries built product stocks (by 3.9 mb m/m to 85.1 mb) ahead of peak maintenance in June. Product exports fell y/y by 24 thousand b/d to 0.55 mb/d led by diesel. Gasoline exports also eased to more normal levels of 59 thousand b/d from a record 0.15 mb/d in February. Crude imports rose by 0.12 mb/d y/y to 3.47 mb/d, led by imports from Saudi Arabia increasing to a near record 1.4 mb/d. Iranian imports, however, fell to a three-low year of 19 thousand b/d. Still, with elevated runs, crude inventories declined by 0.8 mb m/m to 87.7 mb.