US’ May base oils/lube output rises

US base oils and lube output rose to an eight-month high in May, helping to cover strong domestic and overseas demand.

Base oils and lube production of 5.53mn bl in May rose by 13pc from 4.89mn bl the previous month, according to the EIA. The volume was the highest since last September.

Output of 24.78mn bl in the first five months of the year was up 5pc from 23.60mn bl during the same time last year.

That period had included several months of refinery disruption and repair work after an arctic storm damaged a swathe of production capacity earlier in the year.

The unexpected challenge this year was a surge in feedstock costs and an even larger rise in diesel prices because of tight supply. The trend incentivized refiners to prioritise production of middle distillates.

It also put sustained upward pressure on base oil prices. Strong demand added to that upward pressure.

There was also an unusually large fall in base oils output in the Louisiana region of the US Gulf coast in the first two months of the year and then in the US west coast region in April.

The size of the change in output levels during those months suggested factors such as plant maintenance work.

Output in all of those regions was closer to more typical levels in May.

The rise in output left producers better positioned to respond to unexpectedly strong demand in markets like Europe and Africa at that time.