Canada March base oil output steady

Canada’s base oils and lube production held steady in March for a fourth month, mirroring a trend of firm output of premium-grade base oils in the European market.

Base oils and lube output of 46,850mᶟ (41,500t) in March eased from a 13-month high of 49,590mᶟ the previous month, government data showed.

Output rose from year-earlier levels for a second month after sliding for eight straight months to January.

Output levels were also well above average volumes of 37,470 mᶟ/month over the past year.

The firmer volumes mirrored a similar pick-up in output and exports from key sources of premium-grade base oils in the European market. Canada is also a key producer of premium-grade base oils.

Global base oil prices have surged in recent months following the sharp rise in crude and diesel prices since February.

Group I and Group II prices rose more than Group III prices because of the much tighter availability of those supplies and the more balanced supply of Group III base oils.

Some refiners had moved to pour supplies of Group I and Group II light grades back into the diesel pool because of their increasingly narrow price differential to diesel prices.

Refiners have had less incentive to do that with Group III base oils because of their steeper premium to diesel.

Canada’s output of distillate fuel oil rose in March to a 15-month high. At the same time, its base oil and lube production edged down to 0.48pc of total finished product supply in March, from 0.56pc the previous month.

But that share was still the second-highest level in the past five months.

By contrast, distillate fuel oil accounted for 37.01pc of total production, down from 37.97pc the previous month.