US’ June base oils/lube demand rises

US base oils and lube consumption rose in June to its second-highest level in more than three years, adding to multiple signs of strong economic activity.

Base oils and lube demand of 4.07mn bl (573,000t) in June rebounded from 2.97mn bl the previous month to the second-highest level since April 2019, according to the EIA.

The highest level since then had been in March.

The higher volumes lifted total demand to 21.55mn bl in the first half of the year. The volume rose 12pc from 19.17mn bl during the same period last year to the highest in four years.

The persistently high volumes reflected a sustained pick-up in demand even as base oils prices surged.

Finished lubricants prices were also raised several times to keep pace with rising base oils prices as well as other costs.

Blenders and lubricants end-users have sometimes adjusted their procurement plans to lock in more supplies ahead of a rise in prices.

This year's repeated price increases and refiners’ limited surplus supply curbed the feasibility and impact of such moves.

End-users’ ability so far to absorb the higher prices reflected the strength of demand.

The strong consumption coincided with ongoing signs of healthy economic growth. Industrial activity remained firm through August even in the face of fast-rising interest rates.

Strong base oils and lube demand contrasted with signs of softening consumption in Latin America and a more marked slowdown in lube demand in Europe.

An extension of that trend could curb competition for base oils supplies from US refiners.