Before exploring further what this may mean, let’s look at some crucial characteristics of our import demand indicators. To start with, we look only at ports – the 100 biggest ones – where at least 90% of the over in-and-outflows are imports. Therefore, we disregard trading hubs such as Rotterdam and Singapore and focus on those ports where imports are closely linked to the oil consumption in the hinterland (rather than potentially reflecting trading, blending and storage plays). Also we include all inflows irrespective of their origin, taking intra-country flows in the United States, China, France and other places into consideration. In difference to national statistics, we can look at these developments in a complete manner in close to real time, giving a time advantage of typically two and often more months. (On top of that valuable guidance for future arrivals can be derived from our data as we provide a call on the ultimate destination of every single vessel in transit.) Finally, the data reflects countries all across the globe, as very close to 100% of worldwide seaborne trade are reflected, which is otherwise very cumbersome to compile.

How meaningful is the jump in imports?

It is very evident that ample supplies have priced themselves into the market over the last couple of months. Global liftings of gasoline/blending components, naphtha, jet/kero and diesel/gasoil have all surged far above the seasonal range in March, nearly matching the Dec 2022 all-time high (see chart below). The Middle East, empowered by the successful start-up of grassroots refineries in Kuwait and Oman, was instrumental, but also South and Northeast Asia, as well as the US ramped up supplies in this period. Some of these barrels, especially on the East/West route along the Cape of Good Hope, are still hitting the shores, weighing on cracks and refinery margins.

However, exports have only been really high for one month, with April levels are significantly lower before another rebound in May. The upwards trend in imports is more persistent, and it does have significant meaning, as it is occurring in the import ports and not only in trading hubs. Generally, we are still just at the beginning of the seasonal upside in travel in the Northern Hemisphere. Oil demand is surely more and more exhibiting a pattern of one seasonal peak in the summer, as the historical second peak in winter is eaten up by substituting heating fuels with alternatives amid steady global warming. While power, cheap LPG and LNG, and other energy sources are taking away demand in many sectors such as industry, residential, or agriculture, aviation is still 99+% petroleum fueled. And while batteries are making their inroads into road transport, their share in propulsion is likely to be the lowest in long summer vacation trips.

So while the overall picture is still mixed, there is at least a chance that prices (both cracks and outright) may have found the low point, and the coming weeks and months may be more constructive, especially if refinery run cuts and potential outages tighten the supply side somewhat. Any upside in product demand would also be welcome news for crude sellers, with recent stockbuilds likely to incentivise OPEC+ to roll over cuts at the start of June.