US base oils and lube demand rose to a thirty-month high in July, more than countering a fall in the country’s exports as well as a rise in domestic output to the highest in more than three years.US base oils and lube stocks edged lower in response.Total base oils and lube consumption of 3.36 million barrels (473,000 tonnes) in July rose from 2.50 million barrels in June and by 22% from year-earlier levels, government data showed..The volume was the highest since January 2023.Base oils and lube consumption typically rises in the month of July from June as blenders and distributors build stocks as a buffer for any weather-related disruptions during the Atlantic hurricane season.The 34% rise in demand in July from June this year was larger than usual.Demand rose by 6% in July from the previous month in 2024 and by 2% in 2023..The rise in domestic consumption was timely.It coincided with a surge in US base oils output to more than 5.30 million barrels in July. The volume was the highest since May 2022.The rise in domestic consumption also coincided with a fall in US base oils exports to the lowest since early-2023.The dynamic suggested that the strength of the rise in domestic consumption cut availability of and the need to move surplus supplies to overseas markets.The drop in supply highlighted the importance of domestic demand in keeping US base oils supply more balanced and curbing the country’s reliance on overseas markets to absorb surplus volumes.An extension of the strong domestic demand beyond July would help to cushion against the impact of an expected rise in supply in Asia and the Middle East as new production capacity starts to come online.The rise in supply could complicate US refiners’ ability to clear surplus volumes in overseas markets.Any such extension of the US’ strong domestic demand is unlikely.The lack of weather-related base oils supply disruptions during the summer months curbed blenders’ need to tap the stocks they built up in case of such a scenario.Those lingering stocks could now curb buyers’ need to seek replenishment supplies.A seasonal slowdown in consumption during the final months of the year instead boosted blenders’ incentive to keep inventories at lower levels.Such a scenario would again leave US refiners more reliant on overseas markets to absorb any surplus volumes..US’ July base oils exports fall.US’ July base oils imports slip.S Korea's Aug exports to Americas stay lower.Base Oil News stories and analysis also available on ICIS platform
