In January, commercial oil stocks in Japan fell for the fourth consecutive month, by 0.9 mb to 167.9 mb, the lowest level since April. With this draw, they stood at 1.4 mb or 0.8% below a year ago at the same period, while the deficit with the five-year average remained at 9.8 mb or 5.5%. The total stock-draw came from crude, which declined by 1.2 mb, while products abated this drop as they increased by 0.3 mb.
Japanese commercial crude oil stocks declined for the third consecutive month to end January at 96.8 mb, the lowest level since February 2011. With this draw, they were 1.7 mb below a year ago over the same period, while they stood at 3.9% less than the seasonal norm. The drop in crude oil came from higher crude throughput, which increased in January by around 136,000 b/d or 3.5% from the previous month, to average 3.72 mb/d. However, this level was still 6.9% below that of the same period the year before and corresponded to a refinery utilization rate of 82.5%, which was 2.8 percentage points (pp) higher than the previous month, but still 5.7 pp less than the same period the year before.
It should be noted that since the triple disaster in Japan, direct crude burning fell in January from the previous month, averaging about 296,000 b/d, but the volume was more than double from a year ago over the same period as Japan continued to use lowsulfur crude as feedstock for direct burning and to make low-sulfur fuel oil for thermal power generation. So far, only two of Japan’s 54 reactors are in operation following the new government safety standards, which prevents the restart of some reactors. The increase in Japanese crude oil imports for the third consecutive month limited the fall in crude oil stocks. In fact, crude oil imports rose by around 66,000 b/d or 1.7% from the month before to average 3.9 mb/d, although they were down by 1.9% from the previous year.
In Japan, total product inventories rose slightly in January, reversing the drop of the previous month to stand at 71.1 mb. With this build, the deficit with the last five-year average narrowed to 7.6% from 9.8% a month earlier, while the surplus with the same period the year before widened to 0.5% from 0.4% a month ago. The build in total product stocks in January came despite the decrease in oil product sales from a month earlier. Total oil product sales averaged 3.7 mb/d, around 240,000 b/d or 6.1% less than a month ago, but rose 2% from a year ago showing a second consecutive month of y-o-y gains. This increase was driven by the rise in fuel oil products used for electricity utilities to compensate for the loss of nuclear power. Within products, the picture was mixed: gasoline and residual fuel oil went up, while distillates and naphtha saw a drop in inventories. Gasoline stocks rose 2.2 mb, reversing the drop of last month and ending January at 13.8 mb. Despite this build, they showed a deficit of 0.7 mb or 4.7% over the same period the year before, while narrowing the deficit with the five year average to 2.1% from 7.2% a month earlier.
The build in gasoline stocks in January came mainly from lower gasoline sales, which decreased by 14.5% from the previous month, averaging 0.9 mb/d, but they remained 2.0% higher than a year ago at the same period. Residual fuel oil also rose by 0.8 mb to finish the end of the month at 16.3 mb. At this level, they stood at 2.0 mb or 14% above a year ago at the same period. However, they remained 0.9 mb or 5.1% below the five-year average. Regarding the components of fuel oil, fuel oil A and fuel oil B.C stocks saw a build of 6.3% and 4.8%, respectively. The build in fuel oil A could be attributed to higher production, increasing by 7.9%. Healthy imports also contributed to the build in fuel oil A stocks. The rise in imports was the main reason behind the build in fuel oil B.C stocks as the increase in consumption abated some build in fuel oil B.C stocks. In contrast, distillate stocks continued to fall for the second month, declining by 1.6 mb to stand at 31.3 mb, the lowest level since April 2011. Despite this fall, they showed a surplus of 1.6 mb or 5.5% over the same period the year before, while widening the deficit with the five-year average to 10.3% from 9.1% a month earlier.
Regarding the components of distillates, the picture was mixed. Kerosene stocks saw the largest drop, declining by 10.0%, followed by 0.7% drop in jet fuel stocks, while gasoil inventories experienced a build of 15.5%. The drop in kerosene stocks could be attributed to higher demand reflecting cold weather. Lower imports also contributed to the fall in kerosene stocks. Jet fuel stocks also fell as domestic sales rose by 0.3% and production saw a decline of 9.6%. The build in gasoil stocks was mainly due to lower domestic sales which declined by 14.4%. Naphtha stocks saw a drop of 1.1 mb to end the month at 9.7 mb, indicating a deficit of 21% with the same period a year ago and 9.9% below the seasonal average. Higher domestic sales combined with reduced imports were the main drivers behind the fall in naphtha stocks in January.