Japan’s crude oil imports in May slumped by over one million barrel per day (bpd) versus April to their lowest in two years as refiners cut back on purchases from Saudi Arabia and other suppliers due to heavy seasonal maintenance, data showed.
The drop was expected after Saudi Arabia, which provides about a quarter of Japan's crude, said it had slashed production in response to lower refiner demand, but the government data also pointed to possibly weaker-than-usual underlying fuel demand.
Imports by the world's third-biggest oil consumer and its second-largest importer were down 2.7 per cent from a year ago, the first decline in two months. More specific data on end-user oil product demand will be released next week.
Japan imported 18.214 million kilolitres of crude oil in May, the lowest volume since June 2004, data from the Ministry of Finance (MOF) showed.
In April, when refiners were still replenishing stockpiles that had been depleted by strong winter demand, Japan’s crude oil imports rose 19.8 percent to 23.401 million kl (4.9 million bpd), the highest daily import rate since February 2003.
An MOF official said oil imports from the Middle East, especially Saudi Arabia and UAE, fell in May, but more details on import sources would be available only at the end of the month.
The lower imports came after oil power Saudi Arabia cut exports to Asia by over half a million barrels a day since March to match lower demand from refiners during their springtime overhauls, tanker tracker Petrologistics said earlier.
Saudi Arabia shipped 220,000 barrels per day less crude to Asia in May than April, while exports in April were already 350,000 bpd less than March, it estimated.
Saudi Oil Minister Ali Al Naimi said earlier in June that the kingdom, the top exporter and supplier of a tenth of the world's crude, had cut production to 9.1 million bpd in April, but has not said what it will pump in the third quarter.
Lower imports come as Japanese refiners ran their plants at low rates – an average 69.1 per cent of their total capacity at the end of May, the lowest in two years amid a heavier turnaround slate. In January runs stood at more than 90 per cent of capacity.
Separate industry data show crude oil inventories held largely steady at over 110 million barrels over May, showing refiners cut imports directly in line with reduced runs. Operating rates recovered slightly, but industry officials say refiners are reluctant to ramp up too quickly due to signs of weaker than usual summer gasoline demand amid high prices and poor weather.
