US base oil and lube stocks fell in January as a drop in inventories in the US Gulf coast region countered rising supplies in every other region.

Total stocks of 12.30mn bl in January fell by 4pc from 12.83mn bl the previous month, according to the EIA. The fall in supplies was the first in five months.

US base oil stocks had risen steadily throughout second-half 2021 as surplus supplies rose.

High prices kept shut the arbitrage to move those surplus volumes to other markets. Buyers in those other markets instead tapped surplus shipments from other regions like Europe and Asia-Pacific.

Lower US prices from late last year made feasible more arbitrage opportunities to clear more supplies. A sharp fall in US base oil production in January cut the surplus further.

But base oil and lube stocks only fell in the US Gulf coast region, where the drop in base oils production was steepest. Even with the drop in inventories, they remained high.

Base oil and lube stocks in every other region extended their rise in January. Stocks in the US West coast climbed to the highest since early 2019. Stocks in the US East coast rose to the highest since May 2020.