US base oils exports to Europe fell to a three-month low in May, slowing the pace of a recovery in the region’s Group II base oils supply.Base oils exports to Europe fell to less than 300,000 barrels (39,000 tonnes) in May, government data showed.The volume fell from more than 600,000 barrels the previous month and from typical levels of more than 490,000 barrels/month over the past year.Europe’s higher-than-usual Group II base oils imports from markets like the US in March and April helped to cushion the impact of a slump in the region’s output of premium-grade base oils during that time.The slowdown in US shipments in May then coincided with an expected recovery in Europe’s output following the completion of maintenance work in April on a Group II base oils unit in the Netherlands.Europe’s Group II base oils price premium to feedstock VGO prices bottomed out in mid-April before rising steadily to early June.The firmer margins suggested a recovery in regional supply may have taken longer than expected in the face of the slowdown in US exports and seasonal rise in demand.But Europe’s Group II base oils prices also fell relative to US prices during the second quarter of the year.The weaker prices pointed to firmer supply-demand fundamentals in the US than in Europe.Europe’s demand fundamentals faced the prospect of weakening further this and next month because of a seasonal dip in consumption.The region’s Group II base oils supply by contrast could improve amid signs of a pick-up in US exports to Europe in June.Any recovery in shipments would coincide with the prospect of steadier Group II base oils output at higher levels in the Netherlands..US’ May base oils/lube exports fall.Netherlands’ April base oils output stays low
