US base oils supply fell to a one-year low as output and imports declined
Strong domestic demand accelerated stock draws, reducing surplus availability
Tighter balances limited export capacity ahead of a surge in global and seasonal demand
US base oils supply tightened in February as lower output and weaker imports coincided with unexpectedly strong domestic demand, accelerating a drawdown of surplus volumes ahead of late-month global disruptions.
Total base oils and lubricants output fell to 4.40 million barrels (619,000 tonnes) in February, slipping from 4.45 million barrels in January to a ten-month low, EIA data showed.
US output typically falls in February, when scheduled plant maintenance work coincided with a period of seasonally lower demand, slowing the build-up of surplus supplies.
This year’s drop instead coincided with an unusual surge in domestic consumption, tightening balances and reducing surplus availability ahead of the disruptions from end-February.
Key Highlights
· Paraffinic base oils output remained at the second-lowest level in ten months, while naphthenic base oils output fell to a five-month low.
· Total supply, or output and imports combined, fell to a one-year low and lagged demand for a second straight month.
· Domestic demand ran at 75% of output, the second-highest share in three years, with January the highest during that period.
· Exports as a share of output were the second-lowest in six months, holding well below typical levels seen before mid-2025.
· US base oils and lubricants stocks fell for a second month to the lowest February level in five years.
Market Repercussions
Strong domestic demand and tighter supply in February curbed US refiners’ need to move surplus volumes to overseas markets.
The dynamic left fundamentals tighter than usual ahead of the seasonal first-quarter increase in demand, with overseas markets also building smaller buffers from lower US flows.
The tighter supply-demand balance limited refiners’ ability to respond to a subsequent rise in overseas requirements even as global prices surged.
Refiners instead faced the challenge of maintaining sufficient base oils output while strong diesel margins incentivized a switch towards maximise motor fuels production.