Japan Oil Imports Rise for Second Month on Price Drop

By Shigeru Sato and Michio Nakayama

Nov. 20 (Bloomberg) -- Japan's crude oil imports increased in October for a second month after benchmark oil prices in New York tumbled since climbing to a record in July.

Japan imported 19.87 million kiloliters, or about 4.03 million barrels a day, of crude last month, up 2.6 percent from a year earlier, a finance ministry preliminary report released in Tokyo today shows. Imports of liquefied natural gas decreased 8.6 percent to 5.5 million metric tons.

Crude oil futures have dropped more than 60 percent since reaching a record $147.27 a barrel on July 11 on the New York Mercantile Exchange, restoring Japan's appetite for oil. This renewed buying interest won't last, said Hidetoshi Shioda, a senior energy analyst at Mizuho Securities Co. in Tokyo.

“Demand for all petroleum products may see a decline of nearly 10 percent in the year ending March and a similar decline in the next financial year,” Shioda said. “Negative economic growth weighs on Japan's oil-refining industry as it does on other industries.”

The oil import bill totaled 1.33 trillion yen ($13.9 billion) in October, according to the report, indicating a 24 percent increase from a year earlier. Imports of coal fell 3.8 percent to 14.9 million tons in October.

Consumption of gasoline, one of the main contributors to refiners' revenue, declined for a fifth month in September, dropping 8.8 percent, according to the trade ministry's latest data. Demand for gasoil, the fuel for pick-up trucks and farm machines, fell for a fourth month, declining 4.9 percent.

Japan's 10 regional power utilities burned 23 percent less crude and 12 percent less heavy fuel in October compared with a year earlier, the Federation of Electric Power Companies said last week.

Oil in New York traded at $53.00 a barrel, down 1.2 percent, at 9:13 a.m. Tokyo time.

LNG is natural gas that's been chilled to liquid form for transportation by ship. Heavy fuel oil is burned at thermal power generators in Japan, and also is the fuel for boilers at factories.

To contact the reporter on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net.