US base oils and lube demand rose in April to the highest in almost two years on the back of a rebound in domestic consumption.US base oils exports had been the key support that cushioned the impact of sliding demand from domestic buyers since early-2023.That dynamic reversed in April as domestic demand rose to a fifteen-month high.Firmer domestic demand in turn cut surplus supply and eased pressure on US refiners to clear that surplus through overseas markets.US base oils and lube exports stayed high in April, reflecting their ongoing importance to maintain relative supply-balance. But they fell back from the previous month.Domestic base oils and lube consumption came to 3.33 million barrels (469,000 tonnes) in April, government data showed.The volume rose from 2.35 million barrels the previous month and for a second month from year-earlier levels.The rise in consumption from year-earlier levels partly reflected the impact of blenders’ strategy of maintaining lower stocks.A seasonal pick-up in demand depleted those stocks faster, triggering subsequent moves to replenish inventories.The strategy contrasted with the same time a year earlier, when blenders tapped high stocks to cover a seasonal pick-up in demand. Those moves curbed their requirements for additional supplies at the time.Stronger demand this year gave US refiners more leverage to implement another rise in refinery posted prices in the month of April.The steep discount of US base oil export prices to domestic prices also narrowed from late March as firmer domestic demand curbed pressure on refiners to target overseas markets.The price moves, and the rebound in base oils values versus feedstock and heating oil prices, highlighted the wide-ranging repercussions of an improvement in domestic demand.The impact remained relative.The rise in domestic consumption lifted total demand, or domestic demand and exports combined, to 7.15 million barrels in April.The volume was the highest since May 2022.US base oils and lube exports still accounted for more than 50% of the April total even with the rise in domestic consumption.The last time exports accounted for less 50% of total demand was in early 2023.The high share highlighted the importance of exports in supporting firm demand even with a pick-up in domestic consumption.The support from exports faced the prospect of easing during the second quarter of the year as US base oils prices extended their rise. The higher prices made less feasible the arbitrage to a growing number of overseas markets.A less feasible arbitrage in turn increased the importance of domestic consumption holding firm over the coming months.Domestic demand got additional support during the second quarter from concern about weather-related supply disruptions during the hurricane season.That support could fade during the third quarter once buyers have built sufficient stocks.Any extension of the pick-up in domestic demand would then rely on the strength of finished-lube consumption..Brazil’s May lube demand extends rise.Latin America’s April lube demand rises
US base oils and lube demand rose in April to the highest in almost two years on the back of a rebound in domestic consumption.US base oils exports had been the key support that cushioned the impact of sliding demand from domestic buyers since early-2023.That dynamic reversed in April as domestic demand rose to a fifteen-month high.Firmer domestic demand in turn cut surplus supply and eased pressure on US refiners to clear that surplus through overseas markets.US base oils and lube exports stayed high in April, reflecting their ongoing importance to maintain relative supply-balance. But they fell back from the previous month.Domestic base oils and lube consumption came to 3.33 million barrels (469,000 tonnes) in April, government data showed.The volume rose from 2.35 million barrels the previous month and for a second month from year-earlier levels.The rise in consumption from year-earlier levels partly reflected the impact of blenders’ strategy of maintaining lower stocks.A seasonal pick-up in demand depleted those stocks faster, triggering subsequent moves to replenish inventories.The strategy contrasted with the same time a year earlier, when blenders tapped high stocks to cover a seasonal pick-up in demand. Those moves curbed their requirements for additional supplies at the time.Stronger demand this year gave US refiners more leverage to implement another rise in refinery posted prices in the month of April.The steep discount of US base oil export prices to domestic prices also narrowed from late March as firmer domestic demand curbed pressure on refiners to target overseas markets.The price moves, and the rebound in base oils values versus feedstock and heating oil prices, highlighted the wide-ranging repercussions of an improvement in domestic demand.The impact remained relative.The rise in domestic consumption lifted total demand, or domestic demand and exports combined, to 7.15 million barrels in April.The volume was the highest since May 2022.US base oils and lube exports still accounted for more than 50% of the April total even with the rise in domestic consumption.The last time exports accounted for less 50% of total demand was in early 2023.The high share highlighted the importance of exports in supporting firm demand even with a pick-up in domestic consumption.The support from exports faced the prospect of easing during the second quarter of the year as US base oils prices extended their rise. The higher prices made less feasible the arbitrage to a growing number of overseas markets.A less feasible arbitrage in turn increased the importance of domestic consumption holding firm over the coming months.Domestic demand got additional support during the second quarter from concern about weather-related supply disruptions during the hurricane season.That support could fade during the third quarter once buyers have built sufficient stocks.Any extension of the pick-up in domestic demand would then rely on the strength of finished-lube consumption..Brazil’s May lube demand extends rise.Latin America’s April lube demand rises
