Brazil’s base oils supply fell to a three-month low in November amid a drop in production and imports.

The drop in supply coincided with a rise in demand, cutting sharply the country’s surplus volumes.

The smaller surplus curbed the prospect of a repeat of the large supply-build that Brazil faced during the final months of 2021.

The country’s base oils imports slumped in the first few months of 2022 as the overhang of surplus supplies cleared.

The drop in demand at that time curbed interest in supplies from the US, which itself faced a large overhang of surplus volumes to clear.

Brazil’s more balanced supply at the end of 2022 increased the likelihood of a steadier flow of imports over the coming months, including steadier demand for supplies from the US.

Base oils output of 50,740mᶟ (44,950t) in November edged down 52,360mᶟ the previous month, government data showed.

Production held close to that level every month since August.

But output fell from year-earlier levels for a twelfth straight month.

The contraction cut total production to 514,300mᶟ in the first eleven months of the year.

The volume was down 23pc from 665,170mᶟ during the same period in 2021.

Lower output coincided with a slump in imports.

Shipments of 67,030mᶟ in November fell by 38pc from 108,100mᶟ the previous month and by 34pc from year-earlier levels.

The October volume had got a boost from a wave of arbitrage supplies from markets like Europe.

Imports in December showed signs of holding closer to the November levels.

Brazil’s total supply of 117,770mᶟ in November fell from a one-year high of more than 160,000mᶟ the previous month.

The drop in supply cut its surplus over demand to around 20,000mᶟ. The surplus was down from more than 65,000mᶟ in October and closer to more typical levels in the five months to September.