US’ June base oils/lube stocks slide

US base oils and lube stocks fell in June to an 11-month low amid increasingly firm domestic and overseas demand and lower supply.

Base oils and lube inventories of 10.69mn bl (1.51mn t) in June fell by 7pc from the previous month to the lowest since July 2021, according to the EIA.

Stocks fell as US base oils and lube production dipped 6pc in June from the previous month.

The slowdown contrasted with a 37pc rise in domestic demand in June to its second-highest level in more than three years.

US export volumes edged down in June from the previous month but remained higher than usual.

Domestic demand got support from firm economic and industrial activity in the US market. Overseas demand got support from tighter availability from other sources.

The drop in domestic supplies coincided with plant maintenance work. Unusually high diesel prices also incentivized refiners to maximise production of middle distillates over products like base oils.

Base oils stocks fell at a time when blenders typically seek to build additional inventories to cover against any weather-related supply disruptions during the Atlantic hurricane season.

An unusually quiet start to this year’s hurricane season gave refiners and blenders more time to add to their stocks in July and August.

Even at their lower level, base oils stocks in June also remained some 10pc above inventory levels the same time a year ago. They have remained above year-earlier levels every month since August 2021.

US base oils prices rose sharply in first-half 2022 in response to tightening supply and surging crude and diesel prices.

But their premium to crude and diesel remained much lower than during first-half 2021. US base oils stocks fell during that period to their lowest levels in almost eight years.