US base oils and lube output slumped in January to a ten-month low even as naphthenic base oils production rose.Total base oils and lube output fell to 4.60mn bl in January, according to the EIA. The volume was down 13pc from the previous month and the lowest since March 2021..Base oils output slumped early last year after an artic storm struck the US Gulf coast in February. The freezing weather forced the unexpected and rapid shutdown of a swathe of refining production capacity.The drop in output in January this year was unrelated to any cold snap.The lower production instead coincided with a combination of squeezed margins and a large supply overhang that had built up during second-half 2021.Several producers cut their prices sharply late last year and early this year to make workable the arbitrage to move surplus volumes to overseas outlets like India and Nigeria.The lower prices affected US export prices more than domestic prices. Even so, the price-pressure coincided with an ongoing rise in crude and diesel prices. The trend slashed the premium of base oil prices to feedstock and competing fuel prices.The narrower premium boosted the incentive for refiners to divert more feedstock to the production of diesel instead.Paraffinic base oils production fell by 16pc in January from the previous month to 3.89mn bl. The volume was the lowest since March 2021.Naphthenic base oils production rose by 8pc from the previous month to 716,000bl. Even that volume was lower than typical levels of closer to 780,000 bl/month over the past year.The contrasting performance of the different refiners pushed up the share of naphthenic base oils production to 15.6pc of total output in January, up from a 12.6pc share the previous month..US’ January base oil exports extend rise
