US base oils and lube supply rose to a two-year high in July on the back of a recovery in domestic production and an extended pick-up in imports.The rise in supply facilitated moves to build stocks as a buffer against weather-related supply disruptions during the Atlantic hurricane season.The lack of any major supply disruptions so far in turn raised the prospect of leaving the market with more surplus volumes to clear before a seasonal slowdown in demand in the fourth quarter.Base oils and lube output of 5.05 million barrels (711,000 tonnes) in July rose from 4.68 million barrels the previous month and for a sixth month from year-earlier levels, government data showed.Production got a boost from a recovery in paraffinic base oils output in the Louisiana Gulf coast district to more than 1.65 million barrels in July.The region's output recovered from a one-year low of less than 1.30 million barrels in June following the completion of plant maintenance work.Higher base oils output coincided with a further rise in US base oils imports to 1.65 million barrels in July.The import volume was the highest since late-2022 and added to the US’ already-healthy supply of Group III base oils.The US' total supply, or output and imports combined, duly rose to 6.70 million barrels in July. The volume rose from 6.13 million barrels the previous month to the highest since July 2022.The rise in supply coincided with unusually firm US domestic and export base oils prices in July and August relative to feedstock costs and relative to other regions.The firm prices pointed to strong supply-demand fundamentals and incentivized refiners to maintain or raise high output levels.They also complicated arbitrage opportunities if refiners faced a pick-up in surplus volumes that they needed to clear.Base oils margins remained elevated in September and arbitrage opportunities hard to work even with a drop in US base oils prices since the beginning of last month.The dynamic likely slowed any moves to start trimming stock levels as the market switched its focus to a seasonal slowdown in consumption during the fourth quarter of the year..US’ June base oils supply rises.Americas/EMEA base oils supply outlook: Week of 30 Sept
US base oils and lube supply rose to a two-year high in July on the back of a recovery in domestic production and an extended pick-up in imports.The rise in supply facilitated moves to build stocks as a buffer against weather-related supply disruptions during the Atlantic hurricane season.The lack of any major supply disruptions so far in turn raised the prospect of leaving the market with more surplus volumes to clear before a seasonal slowdown in demand in the fourth quarter.Base oils and lube output of 5.05 million barrels (711,000 tonnes) in July rose from 4.68 million barrels the previous month and for a sixth month from year-earlier levels, government data showed.Production got a boost from a recovery in paraffinic base oils output in the Louisiana Gulf coast district to more than 1.65 million barrels in July.The region's output recovered from a one-year low of less than 1.30 million barrels in June following the completion of plant maintenance work.Higher base oils output coincided with a further rise in US base oils imports to 1.65 million barrels in July.The import volume was the highest since late-2022 and added to the US’ already-healthy supply of Group III base oils.The US' total supply, or output and imports combined, duly rose to 6.70 million barrels in July. The volume rose from 6.13 million barrels the previous month to the highest since July 2022.The rise in supply coincided with unusually firm US domestic and export base oils prices in July and August relative to feedstock costs and relative to other regions.The firm prices pointed to strong supply-demand fundamentals and incentivized refiners to maintain or raise high output levels.They also complicated arbitrage opportunities if refiners faced a pick-up in surplus volumes that they needed to clear.Base oils margins remained elevated in September and arbitrage opportunities hard to work even with a drop in US base oils prices since the beginning of last month.The dynamic likely slowed any moves to start trimming stock levels as the market switched its focus to a seasonal slowdown in consumption during the fourth quarter of the year..US’ June base oils supply rises.Americas/EMEA base oils supply outlook: Week of 30 Sept
