Americas March base oils supply rises

Base oils supply in the Americas region recovered in March to a three-month high on the back of a pick-up in output in the US.

Supplies of more than 810,000t in March rose by 10pc from less than 740,000t the previous month, according to production data from major base oil-producing countries in the region.

The recovery in base oils output lifted base oil supplies closer to more typical levels of around 817,000 t/month over the past year.

The volume was high for the month of March.

It was up 13pc from less than 720,000t the same month a year ago. US output was struggling at that time with the aftermath of an arctic storm that struck the US Gulf coast region in February 2021.

The volumes in March 2019 and March 2020 were even lower than last year’s level.

The improvement in supplies likely reflected supply, demand, and price assumptions from earlier in the year. These were unlikely to have reflected the surge in crude oil and diesel prices from late February and their sustained strength since then.

Unusually strong diesel prices relative to crude and tight supplies of the motor fuel have incentivized refiners to produce more middle distillates.

The price dynamics incentivized them to limit base oil production to cover term commitments and to pour any surplus light-grade base oil supplies back into the diesel pool.