LONDON: Inventories of European crude and oil products fell further in May, figures from industry monitor Euroilstock showed, as refineries cut runs due to the deteriorating outlook for economic activity and oil product demand.
The combined inventories of crude oil and oil products declined to 1,063.45 million barrels in May, 1 percent down on April and 3.2 percent down year-on-year.
"In response to the poor refining economics in Europe, regional refiners have resorted to counter-seasonal run cuts," said David Wech, an oil analyst at JBC Energy in Vienna.
"Expectations of persistently weak demand for products should deter any substantial increases in run rates at European refineries, at least over the coming months," he added in a morning note.
The biggest falls were in fuel oil, which was down 3.4 percent month-on-month, and middle distillates, down 2.4 percent. Gasoline was down 1.6 percent month-on-month, whilst naphtha was unchanged.
The refinery utilisation rate dipped to 77.15 percent in May from 79.37 percent in April.
Refineries in Europe have been idling units as the outlook for economic activity has worsened and demand in key European markets has declined month-on-month.
The latest data from struggling European economies such as Spain and Italy show big year-on-year falls in the consumption of gasoline and diesel as unemployment numbers climb and business activity atrophies.
Wech noted total product stocks had fallen by 14.3 million barrels month-on-month, the largest monthly decline in nearly a year.
"This can be mostly attributed to a counter-seasonal fall in middle distillate stocks," he said. These shed almost 9.4 million barrels over the month.
He added that although crude stocks rebounded by 3 million barrels month-on-month to reach a three-month high, on a seasonal basis they are still below the five year average.
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