Japan set for cold weather Dec-Feb, supporting gas, power, oil demand

The winter weather forecast for Japan, released Sept. 24 by the Japan Meteorological Agency, showed that most regions are forecast to experience either a 30-year-average, or below average, temperatures over December-February, in a sign that the country's winter gas, power and oil demand are likely to be supported during peak demand months.

The eastern Japan region is forecast to experience below 30-year average temperatures, while western and southwestern Okinawa and Amami regions are forecast for either average, or below average, temperatures over December-February, the JMA said.

The northern Japan region is, however, forecast to have average, or above average, temperatures during the three-month period.

The severity of the country's winter weather has direct impact on city gas and kerosene demand for heating as well as on power generation fuels -- coal, LNG and oil.

Japan's demand for coal, LNG, crude and fuel oil for power generation as well as city gas and kerosene for heating was robust in January as a result of severe cold spells.

The JMA weather forecast is closely watched by the energy industry as an indicator of Japan's potential demand for winter fuels.

Market views

One Japanese power utility, which has already secured sufficient LNG ahead of the winter months, said the latest weather forecast made it more cautious and be better prepared should there be a nationwide shortage of LNG as a result of tightened power supply and demand balance from January's cold spell.

Two Japanese city gas utilities said the companies are not under immediate pressure to seek more LNG for winter following the release of JMA's latest weather forecast as supplies they had secured for the winter months were ample.

One Japanese refiner said it has yet to see incremental fuel oil demand for winter after some utilities had filled their tanks in the summer. The refiner, however, might see incremental fuel oil demand for power generation in winter amid high spot LNG prices, an industry source said.

Another Japanese refiner is stockpiling kerosene in Hokkaido in northern Japan, for the winter heating demand season, while a third Japanese refiner is putting kerosene in leased storage tanks in South Korea and will ship the fuel back to Hokkaido, in addition to plans to import kerosene during winter.

Japanese refiners expect the volume of crude oil to be procured this winter to be similar to that of last year, and have started adjusting imports so as to be able to stockpile kerosene for heating demand, Petroleum Association of Japan's President Tsutomu Sugimori said Sept. 15.

Corrects forecast in para 3 of story published Sept. 24