Global base oil supply rises in March

Global base oils supply in the Americas, western Europe and Asia-Pacific rose in March amid a recovery in output in the US especially.

Supply of 2.11mn t in March rose by 8pc from 1.95mn t the previous month and by 6pc from year-earlier levels to the highest this year.

The volume was also up from typical levels of around 2.08mn t/month over the past year.

The volume was derived by combining supply in the Americas, eight countries in Europe and seven markets in Asia-Pacific.

The higher supply reflected a pick-up in output in the Americas and Asia-Pacific. These countered a sustained slowdown in supply in the European market.

Global base oil prices have reflected that trend.

European base oil prices have risen faster than prices in other regions to attract additional arbitrage shipments and plug the regional shortfall.

Asia-Pacific base oil prices have risen less steeply and struggled to keep pace with surging crude and diesel prices. The slower increase has made increasingly attractive the arbitrage to Europe and to the Americas.

Total global supplies of 6.0mn t in the first three months of the year were down from 6.32mn t during the fourth quarter of last year. But they were up 2pc from 5.88mn t during the same period last year.

Economic growth was rising strongly in many markets in early 2021. The pace of that growth is now slowing in many markets because of rising costs and supply disruptions.

Base oil prices similarly reflected those changing supply-demand dynamics.

Prices have risen in every market this year. But their premium to crude and diesel remained lower than during first-half 2021.