US base oils and lube demand rose to a six-month high in January on the back of a seasonal pick-up in domestic demand.Domestic consumption of 2.64 million barrels (372,000 tonnes) in January rose from a record-low of less than 1.20 million barrels the previous month, government data showed.The rise in demand extended a regular trend.Domestic base oils and lube consumption peaked for the year in the month of January in three of the last four years, including last year.Demand rebounded at the start of each year despite a seasonal dip in industrial and transport activity during the winter months.The higher consumption instead partly reflected moves by blenders and end-users to replenish stocks that they had run down at the end of the previous year.The seasonal pick-up in demand at the start of the year is usually short-lived.Domestic demand fell by more than 13% in the month of February from January in each of the past five years.The scenario showed signs of repeating itself this year.The pick-up in domestic demand in January cut surplus supply.Lower supply in turn curbed pressure on refiners to clear additional volumes in overseas markets.US base oils and lube exports duly fell to a three-month low in January, and base oils exports to a thirteen-month low.Total US demand, or domestic consumption and exports combined, still rose in January to a six-month high of 6.35 million barrels.The respite was short-lived.US base oils export prices stayed unusually weak in January relative to feedstock prices and to prices in other regions, ICIS data showed.Prices weakened further in February as US refiners moved to line up a swathe of arbitrage shipments to overseas markets like India.The export-price weakness and the pick-up in arbitrage shipments pointed to a rise in surplus supplies.A rise in surplus supplies in turn suggested that US domestic demand fell in February from January, repeating the long-term trend of recent years..US’ January base oils supply falls.Base Oil News stories and analysis also available on ICIS platform
