US base oil exports to Mexico fell in March to a four-month low, even as shipments to the rest of Latin America surged.

Exports of 476,050bl (67,050t) in March fell by 20pc from 592,510bl the previous month, government data showed.

Even with the slowdown, base oil exports of 1.62mn bl to Mexico in the first three months of the year were up 11pc from 1.46mn bl in the fourth quarter of last year and the highest quarterly volume in two years.

The high volume of exports to Mexico in the three months to February had coincided with weak base oil prices relative to diesel.

Several US producers were also seeking to clear an overhang of surplus supplies at that time.

The drop in volumes in March coincided with slightly firmer base oil prices relative to diesel. The higher base oil prices made less attractive the arbitrage to use some of the supplies as a fuel-extender.

Surplus US supplies of light-grade base oils were also tightening.

Their narrow premium to diesel, and the growing shortage of diesel in the US, incentivized refiners to divert more of their feedstock towards production of the motor fuel instead of base oils.