US base oil and lube stocks fell in March to a six-month low as strong domestic and overseas demand outweighed a rise in production.
Base oil and lube stocks of 11.33mn bl (1.60mn t) in March fell by 10pc from 12.54mn bl the previous month, EIA data showed.
The size of the contraction was the steepest since February 2021, when an arctic storm struck the US Gulf coast region. The inventory volume was the lowest since last August.
US base oil stocks fell even as the country’s production of the lubricant feedstock recovered in March to a three-month high.
But domestic sales rebounded even more sharply to their highest since first-half 2019.
Base oil and lube exports also surged in March to their third highest since May 2018 amid a clear-out of surplus volumes from late last year and early this year.
US base oil and lube stocks remained up 39pc from 8.18mn bl the same month a year ago. But they were still the second lowest for the month of March since 2017.
Base oils and lube stocks typically fall from the month of March as domestic lube demand revives and plant maintenance work trims supply.
Scheduled plant maintenance work is unusually light during the second quarter of this year.
But the drop in base oils and lube stocks has coincided with a surge in diesel prices relative to crude and with unusually tight US supplies of the motor fuel.
Availability of feedstock to produce diesel and base oils has also tightened.
The trend incentivizes refiners to focus on maximizing production of diesel over the coming months.
