Japanese April oil demand declined m/m by a substantial 0.76 mb/d and y/y by 0.23 mb/d to 3.66 mb/d, although high base effects accentuated the extent of the decline. March demand was exaggerated by restocking ahead of the April tax hike, resulting in demand (particularly gasoline) registering y/y growth for only the second time in 14 months. April's declines were led by gasoline which fell m/m by 0.16 mb/d and y/y by 0.1 mb/d, to 0.85 mb/d. Crude burn and fuel oil demand both fell to six-month lows, largely in line with data from Japanese utility companies. The former fell below 0.2 mb/d whilst fuel oil demand fell to 0.34 mb/d. Finally, naphtha demand remained subdued in line with our expectations at 0.75 mb/d, lower y/y for the second consecutive month, as maintenance was extended by a week at the Yokkaichi ethylene unit. Despite the sharp reduction in Japan's oil demand in April, year-to-date declines are largely in line with our forecasts, running lower y/y by 84 thousand b/d. We expect Q2 14 demand to remain on a similar trend as the economy adjusts to changing fiscal policies.
Japanese refinery runs also fell to a six month low of 3.35 mb/d, down y/y by 42 thousand b/d on permanent closures. We expect runs to remain subdued in May and June, as planned maintenance intensifies with some 0.6 mb/d offline this month, rising to almost 0.9 mb/d in June. As a result, we forecast that runs will fall by a further 0.25 mb/d in May and 0.15 mb/d in June, taking throughputs below 3 mb/d for the first since May 2011. Crude oil imports fell to 3.53 mb/d, down m/m by 0.3 mb/d, with Kuwaiti imports lower m/m by 0.14 mb/d. Iranian imports fell by 83 thousand b/d to 57 thousand b/d. Given the extent of maintenance, we expect imports to remain subdued in Q2 14, before rising again in Q3 14.