The release of data by the Japanese government suggesting that the world's second-biggest economy is still consuming much less oil than it was a year ago has dealt a blow to recent optimism about recovering demand in Asia. Crude imports in July were 18.1 per cent lower than a year earlier, while the volume of oil processed by refineries fell by 12.7 per cent, according to Japan's ministry of economy, trade and industry.
The data also showed that sales of refined oil products in Japan had sunk to a 22-year low in July, after falling for 14 consecutive months. Sales were 8.6 per cent below their level in the same month last year. Japan's third-biggest oil refiner, Idemitsu Kosan, said yesterday that it planned to process 12 per cent less crude this month than last September because of continued weak demand for petroleum products.
The company said it would reduce the volume of crude it processed in its four refineries to about 500,000 barrels per day (bpd). Continued soft domestic demand for products such as petrol and diesel also prompted Idemitsu to move up the start of seasonal maintenance work at its 160,000 bpd Aichi refinery in western Japan. In another sign that economic recovery may be faltering, the country's trade ministry reported that manufacturers increased production by only 1.9 per cent in July, the slowest pace in four months.
These latest figures come a day after the Abu Dhabi National Oil Company (ADNOC) announced plans to ramp up crude exports next month. That move suggests that ADNOC, which is one of Japan's biggest suppliers, has seen strengthening oil demand from its customers, which are almost exclusively in Asia. Japan is the biggest importer of ADNOC's crude, followed by South Korea. The most recent data from the Joint Oil Data Initiative showed lower Japanese oil demand in June was more than offset by increases from Asia's other top oil consumers, China, India and South Korea.
Nonetheless, some Asian buyers of the emirate's crude said yesterday they had been notified by Kuwait Petroleum Company that they would continue to receive 5 per cent less than their contracted oil volumes in the fourth quarter. Crude, which touched US$75 per barrel last week, fell towards $70 yesterday amid signs that OPEC members were adhering less closely to the record output cuts that the group announced last year.
The tanker tracker Petrologistics said last week that the 11 OPEC members bound by production quotas were straying further from their official targets. Imad al Atiqi, a member of Kuwait's supreme petroleum council, said on Sunday that OPEC producers were consuming more of their own crude. However, JODI data for June showed higher oil demand in Saudi Arabia than in June last year, but lower consumption by the number two exporter, Iran.