South Korean domestic oil product demand eased in January from a year ago as a cold snap relented during the month, allowing refiners to rebuild depleted fuel stocks, government data showed.

But flat-out operations at most plants also pulled crude stocks to their lowest in a year and a half at a time when Japan is struggling to rebuild inventories from a three-decade low, setting the stage for potentially strong spring import demand.
Fuel demand in South Korea, Asia's fourth-largest consumer, fell by 1.6 per cent year-on-year to 2.29 million barrels per day (bpd) in January, Korea National Oil Corp (KNOC) said.
That was down 4.4 per cent from a particularly frigid December, when demand rose by three per cent versus the previous year to its highest rate in two years. Demand was particularly strong in January 2005 due to a late-arriving cold spell.
“Temperatures in January rose significantly from December and that slashed heating fuel consumption, which was the biggest factor for the overall decline,” said Kim Sun-ho, a KNOC analyst.
In December, icy weather brought heavy snow to South Korea and kept temperatures well below seasonal norms, forcing refiners to draw down heating fuel stocks to the lowest in eight years.
Total fuel stocks in December were at their lowest in 20 months.
But inventories rebuilt in January, up nearly 6 per cent to 45 million barrels. Fuel stocks now stand 1.4 per cent higher than a year ago as refiners continue to run nearly flat out at around 2.5 million bpd, the data showed.
A further build in oil product stocks might be delayed, however, as South Korean refiners plan to slash their crude runs by 4.4 per cent in February and another 1.5 per cent in March due to poor margins, a survey shows.
A combination of steady refinery runs and a dip in imports versus December pulled down crude inventories, causing stockpiles to fall to their lowest since May 2004. At 11.5 million barrels, they stand 10 per cent lower than a year ago.
Imports by the world's fourth-biggest crude buyer were 18.8 per cent higher than a year ago, however, as refiners bought supplies ahead of an increase in an import tariff in February.
The low crude stocks in South Korea and Japan contrast with those in the US where heavy imports, milder winter weather and ligering post-hurricane refinery outages have boosted supplies to above-average levels.