Global base oils supply slips in April

Global base oils supply in the Americas, western Europe and Asia-Pacific edged down in April amid a drop in output in North America and in northeast Asian markets like South Korea and Taiwan.

Base oils supply of 2.03mn t in April fell from 2.10mn t the previous month, government data showed.

Supply rose for a third month in four from year-earlier levels.

The steady increase lifted total supply to 8.01mn t in the first four months of the year. The volume was up 3pc from 7.76mn t during the same period last year and the highest since at least 2019.

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

Supply often falls in the month of April from the previous month because of plant maintenance work. Such activity affected output in several markets in April this year.

But the size of the drop in supplies was relatively small at a time when availability in some regions was tighter than expected. Availability in other regions was more plentiful than expected.

The supply dynamics coincided with softening lube demand in Europe and unexpectedly weak consumption in China. Those trends contrasted with strong demand in the Americas and in southeast Asia.

The differing supply-demand fundamentals in different markets generated price-arbitrage opportunities and sufficient supply to tap those opportunities.

Global base oil prices reflected the readier availability of supply and mixed demand dynamics.

Prices have risen sharply in recent months. But their premium to crude and diesel remained much lower than during the same time last year.