Japan's gasoline sales pick, outpace inflation and recession fears - PAJ

Quantum Commodity Intelligence - Oil product sales in Japan jumped last week as economic recovery from the worst of the Covid-era continued to outweigh the impact of inflation and the threat of recession, weekly data from the Petroleum Association of Japan (PAJ) showed.

Product sales were up almost 8% week-on-week to the equivalent of 2.21 million bpd, with volumes in the week to 12 July up 23% from 2021.

That was led by a 12% increase in gasoline sales to the equivalent of 920,000 bpd, with sales volumes now running 24% ahead of last year. Gasoil sales were up 27% week-on-week to 650,000 bpd and are 31% ahead of last year.

The numbers came as Japan's government said Wednesday that it would trim its gasoline subsidy to wholesalers to JPY 36.9/l ($0.27/l), down from JPY 40.8/l last week, as crude and product prices have eased over the past month amid growing inflation and recession fears.

The gasoline crack in Asia has retreated from an all-time high in nominal terms, with Quantum data showing spot refining margins versus Brent crude for cargoes of 92 RON falling from a 24 June high of +$39.79/b to hit +$13.22/b on Wednesday.

Japan first adopted the support measure in January and expanded the scheme amid heightened market volatility after Russia invaded Ukraine.

As signs of demand continued to pick up in Japan, PAJ's data showed crude throughput up 110,000 bpd week-on-week to 2.46 million bpd.

Refinery run rates are now at 71.3% of nameplate capacity, an increase of 3.5 percentage points from last week and 11 percentage points from the same week last year.

When considering maintenance and shutdowns, Japan's refiners are running at 90.6% of capacity – up from 89.6% a week ago and 81.5% in 2021.

Inventory figures saw crude oil volumes jump to 68.2 million barrels, up 3.6 million barrels week-on week. Gasoline stocks were down 610,000 barrels at 8.62 million barrels, with naphtha up 510,000 barrels at 9.68 million barrels and kerosene up 100,000 barrels to 8.84 million barrels.