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South Korean Oil Demand Growth
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South Korean oil demand posted its fourth straight month of y/y growth, with Korean inland deliveries totalling 2.139 mb/d, although the growth rate slowed considerably to just 6 thousand b/d y/y (0.3%) in October, compared to the 4% increase seen in September, said Barclays Capital in a research note.
Once again, above-normal temperatures was the primary reason for the slowdown in growth rates and, while November saw a warm start to the month too, temperatures have dropped sharply recently. Not surprisingly, Heating Oil was the largest drag, down y/y by 24 thousand b/d, while the strength in naphtha (up y/y by 70 thousand b/d) and LPG (up y/y by 24 thousand b/d) continued.
According to Barclays, in the year to date, largely due to the strong performance in Q3 and the continuation of that trend into Q4, South Korea’s demand is running higher y/y by 9 thousand b/d, reversing the sharp drop in Q2. Crude Oil imports increased by 8.3% y/y, buoyed by healthy refining margins and strong regional demand, which, in turn, facilitated a 5.5% y/y increase in refinery runs.
Oil product exports gained 1.7% y/y, with the year-to-date increase a record 20%, with Japan the largest destination for Korea’s exports. Inventories, however, built during the month, and currently totals 32 days of consumption.