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Japan Stock Movements in May 2012

Source: OPEC 6/19/2012, Location: Asia

In April, commercial oil stocks in Japan rose by 8.3 mb for the second consecutive month to stand at 172.7 mb, the highest level since November 2011. However, despite this build, they stood at 8.4 mb or 4.6% below a year ago at the same period and almost at the same level as the latest five-year average. The total stock-build was divided between crude and products as they rose by 2.8 mb and 5.7 mb, respectively. Japanese commercial crude oil stocks grew further in April, increasing by 2.8 mb to stand at 103.6 mb, the highest level since July 2011.

Despite this build, they indicated a deficit of 1.5 mb or 1.4% compared to the same time the previous year. However, they remained at 1.6 mb or 1.5% above the seasonal average. This build came mainly from lower crude throughput, which decline by 150,000 b/d or 4.1% to an average of 3.5 mb/d. However, this level still remained at 8.2% above the level reached at the same time a year ago.

The refiners in Japan were running at 78.8%, which was 3.0 percentage points (pp) lower than in the previous month but much higher ó 8.2 pp ó than the same period last year. The build in crude oil stocks came despite lower crude imports in April declining by around 280,000 b/d, to stand at 3.9 mb/d. But this level rose by 10.2% year-on-year. It should be highlighted that direct crude burning in power plants continued to spike more than a year after Japanís Fukushima crisis. Aprilís figures stood at around 320,000 b/d, more than the double the level in April 2011 and about 41,000 b/d higher than the previous month, when Japanís direct burning stood at 281,000 b/d.

Japanís total product inventories reversed the decline that occurred in the last two months and rose by 5.7 mb to end the month of April at 69.2 mb. At this level, they still remained at 6.9 mb or 9.0% below the previous year during the same period and 2.5 mb or 3.5% less than the seasonal average. This stock-build for total products came on the back of weaker domestic product sales, which declined by about 570,000 b/d or 15.3% to average 3.14 mb/d. But at this level, Japanese demand was 4.7% higher than a year earlier and represented the fifth straight month of gains. Higher imports also contributed to the build in product stocks.

In fact, product imports rose by around 95,000 b/d or 17% in April versus a month earlier. With the exception of gasoline, all products saw a build, with naphtha increasing the most. Gasoline stocks declined slightly by 0.2 mb to end April at 14.1 mb and showed a deficit of 0.8 mb or 5.6% compared to a year ago and 0.3 mb or 2.2% less than the fiveyear average. The fall in gasoline stocks could be attributed to a decline in output as they dropped by 10.9%. Higher exports, which increased almost by half, also contributed to the fall in gasoline stocks.

The decline of 5.1% in gasoline domestic sales limited the fall in inventories. Distillate stocks rose 1.9 mb in April, after four consecutive months of decline, ending April at 27.2 mb. Despite this build, they remained 8% below the same period a year ago and 1.8% less than the seasonal norm. All components of distillates experienced a build with the greatest attributed to jet fuel, which increased by 40.3%, followed by kerosene and gasoil rising by 2.9% and 0.4%, respectively.

The build in jet fuel stocks came mainly on the back of lower domestic sales declining by almost 40%. Lower inland consumption also contributed to the build in kerosene and gasoil stocks. Residual fuel oil stocks reversed the decline for the second consecutive month and rose by 1.5 mb to finish April at 16.9 mb. At this level, they were 1.2 mb or 6.4% below the same period a year ago and they are 1.1 mb or 6.1% beneath the fiveyear average.

Within the components of fuel oil, fuel oil A saw a build of 8.5% while fuel oil B.C stocks showed a gain of 10.1%. The build in fuel oil A could be attributed to lower domestic sales, which decreased by almost 30%. Lower domestic sales by around 10% were also the main reason behind the build in fuel oil B.C inventories. However, domestic sales for fuel oil B.C, which is mostly used for power utilities, jumped 78.5% from a year ago during the same period Demand for this product is likely to stay high in coming months amid difficulty in restarting nuclear reactors. Naphtha saw the bulk of the build with an increase of 2.5 mb to end April at 10.9 mb, the highest level since October 2011. Despite this build, stocks remained at 2.5 mb or 18.7% lower than the same period a year ago and 0.6 mb or almost 5.1% below the seasonal average. Lower domestic sales, combined with higher imports, were the main driver behind the build in naphtha stocks in April.

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