An ongoing rise in US base oils output in January added to domestic supply at a time of year when demand faced a seasonal slowdown and stocks had already surged to a two-year high at end-2022.Base oils and lube output rose in January to a six-month high despite the start of a round of plant maintenance work during the month..The rise in supply and high stocks helped to cover for the drop in production during the maintenance work that extended into February and March.The firm output levels in January also suggested that supply would extend its rise following the completion of the maintenance work in early April.Rising production and muted demand in January increased pressure on producers to adjust prices to spur a pick-up in demand and reverse the supply-build at the end of last year.Refiners duly cut their posted prices in January. Lower prices also increased the incentive for refiners to trim base oils output and produce more middle distillates instead.Rising base oils output in the US Gulf coast in December and January had instead contrasted with a fall in middle distillates production.The trend boosted base oil’s share of total refined products output in the region to its highest level since last June.Lower prices also cut the attraction of moving more base oils from overseas markets both to the US and to Latin America.US base oils imports fell in January from the previous month amid a slump in supplies from South Korea, EIA data showed. An open arbitrage from Asia-Pacific to Latin America in second-half 2022 had triggered a wave of shipments from sources like South Korea and Taiwan to the region.The trend complicated the removal of surplus US base oils supplies at end-2022.The trend also highlighted the importance of taking into account prices outside the US at a time of plentiful global supply and fragile demand..US’ January base oils/lube output rises
An ongoing rise in US base oils output in January added to domestic supply at a time of year when demand faced a seasonal slowdown and stocks had already surged to a two-year high at end-2022.Base oils and lube output rose in January to a six-month high despite the start of a round of plant maintenance work during the month..The rise in supply and high stocks helped to cover for the drop in production during the maintenance work that extended into February and March.The firm output levels in January also suggested that supply would extend its rise following the completion of the maintenance work in early April.Rising production and muted demand in January increased pressure on producers to adjust prices to spur a pick-up in demand and reverse the supply-build at the end of last year.Refiners duly cut their posted prices in January. Lower prices also increased the incentive for refiners to trim base oils output and produce more middle distillates instead.Rising base oils output in the US Gulf coast in December and January had instead contrasted with a fall in middle distillates production.The trend boosted base oil’s share of total refined products output in the region to its highest level since last June.Lower prices also cut the attraction of moving more base oils from overseas markets both to the US and to Latin America.US base oils imports fell in January from the previous month amid a slump in supplies from South Korea, EIA data showed. An open arbitrage from Asia-Pacific to Latin America in second-half 2022 had triggered a wave of shipments from sources like South Korea and Taiwan to the region.The trend complicated the removal of surplus US base oils supplies at end-2022.The trend also highlighted the importance of taking into account prices outside the US at a time of plentiful global supply and fragile demand..US’ January base oils/lube output rises