US base oils and lubricating oil demand faced a seasonal slowdown in November but still rose from year-earlier levels for a fourth month.
The trend extended a pattern of strong lube consumption throughout the year on the back of firm economic growth.
Strong domestic lube demand contrasted with lower base oils production in the country. The surplus of production over demand fell in response to its narrowest level in six years.
The smaller surplus limited availability of supplies for export in the second half of the year especially and helped to support US base oils prices at firm levels relative to other markets.
Base oils production is likely to remain lower than usual early this year because of scheduled plant maintenance work. Refiners also remain incentivized to produce more distillates instead of base oils.
But slowing economic growth in the US is also likely to compound a seasonal slowdown in lube demand at the start of the year.
Refiners’ posted-price cuts in January should help to partially counter that trend.
US base oils and lube consumption of 3.29mn bl (463,400t) in November fell from 3.58mn bl the previous month, EIA data showed.
Demand has fallen in the month of November from the previous month in six of the last eight years as blenders slowed activity before year-end.
Base oils and lube consumption rose by 2pc from year-earlier levels, lifting total demand to 37.64mn bl in the first eleven months of the year.
The volume was up 8pc from 34.84mn bl during the same period last year.
The rise in demand cut its shortfall to US base oils and lube production to 15.21mn bl in the first eleven months of 2022. The gap was 21.09mn bl during the same period in 2021.
Strong demand and a smaller surplus gave US refiners more leverage to maintain firm posted prices during the year.
The avoidance of any posted price adjustments during the last three months of 2022 in turn curbed the need for blenders to make any significant changes to their procurement plans.
