Argentina’s lube demand climbed at its fastest pace in two years in October, signalling a pick-up in economic activity heading into the fourth quarter.

Total lube consumption reached 19,700 cubic meters (17,500 tonnes) in October, up 11% year-on-year, Ministry of Economy data showed.

Automobile lube demand rose at its strongest rate in three years, while industrial oils consumption posted its fastest expansion in 30 months.

It was the first time since March that both auto and industrial lube demand rose simultaneously – a trend that suggested broader economic growth.

The recovery in domestic lube demand, paired with the resumption of base oils exports, helped to draw down a sizeable surplus that built up in September.

The exports consisted mostly of a large Group I base oils cargo to Nigeria, taking advantage of firmer West African demand and less competitive prices for European supplies.

Lower stocks accelerated blenders’ need to secure replenishment volumes, while stronger end-user demand eased concerns about carrying larger inventories.

Argentina’s base oils and lube demand could get additional support following October’s mid-term elections, which removed a key policy uncertainty that had weighed on supply-chain decision-making.

Demand could get a further lift after unexpected refinery production issues in early November affected the country’s main Group I base oils plant, increasing the need for alternative supplies.

Recovering activity in Argentina, combined with stronger consumption in Brazil in recent months, raises the prospect of an increase in South American demand for US base oils over the coming weeks.