Industry Trend Analysis - Q2 Crude Outlook Positive - MAY 2017

BMI View: While end of the peak winter demand and brimming domestic fuel stockpiles led South Korea ' s crude imports to soften in February, we anticipate imports to return to strength in Q217, as favourable prices and reduced competition in the regional fuels market incentivise Korean refiners to increase runs.

South Korea imported 88.6mn bbls (equivalent to 3.1mn b/d) of crude oil in February 2017, a decrease of 8.3% on year, and an end to five consecutive months of yearly growth in its crude imports.

Imports fell partly due to seasonal factors, as winter demand peaked over December-January. Moreover, oil consumption in the power sector remained soft, due to stiff competition from cleaner energy sources, such as LNG and nuclear. In addition, brimming domestic fuel stockpiles would also have curtailed appetite for crude purchases. Data from the Korea National Oil Corporation (KNOC) shows that gasoline stocks reached a record high in January 2017, while diesel stocks also rose to a three-month high in the same month.

February Crude Decline Only A Blip
South Korea - Monthly Crude Oil Imports, mn bbls & % chg y-o-y
Source: KNOC, Bloomberg, BMI

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