Asia’s base oils supply rose to a fourteen-month high in September as a recovery in Japan’s output added to firm production levels among the region’s other key refiners.

Total supply of around 980,000 tonnes in September rose from less than 940,000 tonnes the previous month and by 15% from year-earlier levels, government data showed.

The volume excluded China.

Asia's rising supply triggered only a small increase in surplus volumes from the previous month because of a strong rise in regional demand.

The surplus of around 125,000 tonnes in September rose by less than 5,000 tonnes from the previous month.

The additional volumes lifted the surplus to more than 300,000 tonnes in the third quarter of the year.

The volume was the highest since the same period last year.

But consistently-firm demand left the size of the surplus much smaller than year-earlier levels of more than 370,000 tonnes.

The firm demand and smaller surplus enabled Asia’s refiners to focus on covering buying requirements within the region.

The more balanced fundamentals also curbed their need to line up shipments to more distant markets or to offer cargoes at price levels that facilitated such moves.

An open arbitrage to move base oils from Asia to India, and a closed arbitrage from Asia to the Americas reflected that dynamic.