US base oils and lube demand rose in June as a pick-up in exports outweighed weak domestic consumption.The rise in exports highlighted the importance of shipments to overseas markets staying high even at a time when surplus supply was tighter.That dynamic in turn highlighted the persistent weakness of the country’s domestic base oils and lube consumption.Domestic consumption of 2.59 million barrels (365,000 tonnes) in June fell by 10% from year-earlier levels, EIA data showed.Consumption rose by 11% in June from the previous month.Demand rose in the month of June from May for the first time in three years.The higher consumption coincided with moves to build additional stocks in anticipation of an active Atlantic hurricane season.Any weather-related supply disruptions over the coming weeks would help to work down those stocks.The avoidance of any such disruptions could instead muffle any seasonal pick-up in domestic demand over the coming weeks as buyers first cover requirements with supplies from those inventories.Slower domestic demand would in turn further increase US refiners’ reliance on overseas markets to avoid a build-up of surplus supplies.Firm base oils and lubricants export volumes in June reflected that growing reliance even before a seasonal dip in domestic demand in the fourth quarter of the year.Exports rose to a three-month high of 4.0 million barrels in June even at a time when US base oils prices had rebounded sharply relative to prices in other markets.The shipments included large export volumes to Mexico that far exceeded the country’s requirements to meet its lube demand.Signs of more base oils shipments from the US to India in July and to West Africa in August suggested that refiners remained focused on avoiding a supply-build even at a time when surplus supply was tighter.The prospect of easing supply-tightness and weaker domestic demand over the coming weeks is likely to add to the importance of shipments to those kinds of markets.The higher shipments in June helped to boost the US’ total demand, or domestic consumption and exports combined, to almost 6.60 million barrels that month, from less than 5.90 million barrels in May.Exports accounted for more than 60% of the June volume for the fourth time in five months..US’ June base oils supply rises.US’ June base oils/lube exports rise
