US base oils supply rose to a five-month high in June on the back of higher output and imports.The rise in supply contrasted with a fall in demand to a four-month low.Supply duly outpaced demand in June for the first time in five months, triggering a rise in stocks.But the size of the supply-surplus was small.The small surplus and muted stock-build kept inventories at manageable levels.The manageable supply levels limited downward pressure on domestic base oils prices heading into the third quarter of the year.The dynamic highlighted the attraction of curbing a build-up of surplus supplies and the importance of maintaining elevated exports to achieve that goal.US base oils supply rose in June as output climbed to a six-month high of 4.94 million barrels (696,000 tonnes)..Output rose following the completion of most plant-maintenance work the previous month..Higher output, combined with a pick-up in imports, lifted total supply to 6.24 million barrels.Supply rose above the 6 million barrel/month level for the first time in three months to the highest since January.Rising supply contrasted with lower demand amid a simultaneous fall in domestic consumption and exports.The slowdown cut total demand to 6.01 million barrels in June, down from a seven-month high of 6.67 million barrels in May.With demand lagging supply, US base oils stocks edged up to 10.15 million barrels in June. They were still the third-lowest in almost four years..The May volume of 9.91 million barrels was the lowest during that period.US base oils demand would have been even lower, and the rise in stocks steeper, if not for a pick-up in exports to outlets like Mexico and India.The rise in shipments partially cushioned the impact of a drop in exports to South America and Europe.Spot supplies often account for a large portion of shipments to markets like India and Mexico.South America and Europe are key outlets for term shipments.The fall in shipments to those markets pointed to slack overseas demand for term shipments.The rise in shipments to India and Mexico pointed to moves to clear and limit a subsequent build-up of surplus supplies heading into the third quarter of the year.US base oils prices still fell during the third quarter, especially for export shipments.But the size of the price-drop was relatively manageable, with base oil margins holding at levels that incentivized refiners to maintain steady output..S Korea July exports to Americas mixed.US June base oils/lube exports fall.US’ May base oils stocks fall.Base Oil News stories and analysis also available on ICIS platform
