US base oils and lube demand fell in February as a slide in domestic consumption outweighed a pick-up in export volumes.Shipments to overseas markets rose even as US base oils output slumped in February to a four-year low.The rise in shipments pointed to a build-up of surplus volumes to clear despite the lower supply.The dynamic highlighted the weakness of domestic demand and the subsequent need to sustain high exports.It also suggested that high export volumes by themselves may no longer be sufficient to limit a build-up of surplus supplies.US base oils and lube consumption of 1.59 million barrels (224,000 tonnes) in February fell by 25% from year-earlier levels, according to the EIA..The contraction followed a 32% slide in demand in February 2024.US demand typically sees a seasonal slowdown during the winter months.The size of the contraction in February this and last year compounded the impact of that seasonal slowdown and followed a similar slide in consumption in the month of January.The sharp slide in domestic demand speeded up a build-up of surplus supplies that already rose to a 21-month high in January.Falling domestic demand and rising surplus supplies increased the importance of exports holding at unusually high levels.Shipments to overseas markets duly rose to an eleven-month high in February and included a pick-up in exports to arbitrage outlets like Israel, India and the Middle East.The removal of those surplus supplies and the slump in base oils output in February triggered a subsequent drop in US base oils and lube stocks to a four-month low.A round of plant maintenance work from the end of the first quarter of the year, and stock-building ahead of the shutdowns, likely kept supply at lower levels over the following weeks.Even so, US base oils prices mostly held relatively steady on an outright basis and relative to feedstock vacuum gasoil prices through the rest of the first quarter of the year.US base oils price premiums to VGO then rose in the second quarter more because of lower crude oil prices rather than a rise in outright base oils prices.The dynamic suggested that domestic demand remained unusually weak through the rest of the first quarter and at the start of the second quarter of the year..US’ February base oils supply slumps
