On Thursday, the head of the Petroleum Association of Japan (PAJ) Tsutomu Sugimori shared his opinion that the weaker demand for oil in Japan due to the pandemic is balanced by the output cuts pact from the world’s major oil producers.
Sugimori said that the country’s demand for gasoline and gasoil has improved since May after the physical distancing efforts have eased. However, the demand for jet fuel has stayed low.
Japan’s demand for gasoline is likely to go down by 25% year-on-year in May, while gasoil demand dipped by 11%, estimate JXTG.
The gap of demands between the gasoline and gasoil with jet fuels is putting the policy into a jam. Sugimori said that the output of gasoline and gasoil needs to be increased while keeping kerosene, which in the same grade as oil product as jet fuel, low.
“Refiners may need to run their secondary units to meet weak demand for kerosene or jet fuel and import more gasoline and gasoil to fill a shortage,” Sugimori said.
Meanwhile, as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) prolong the 9.7 million bpd crude production cuts until end-July, seven sources said that Saudi Arabia has cut its crude export volume for at least five buyers in Asia.
Sugimori added that if Japan needs more crude oil, the country can always purchase from the spot market. He expected that in June, the fall in demand would be less significant as the economic activity continues to recover.
He forecast, gasoline demand to slump by 10% and gasoil by 5% this month.
