Europe’s January base oil supply falls

Base oils supply from six countries in Europe fell in January to its lowest since first-half 2019, squeezing availability even before a round of scheduled plant maintenance work.

Base oil supply fell to less than 225,000t in January, down by 36pc from more than 340,000t the previous month. The volume, derived mostly from production from markets in western and southern Europe, was the lowest since first-half 2019.

The volume accounted for some 62pc of those markets’ base oil production capacity, down from more than 90pc the previous month.

Base oil supply in Europe typically falls at the start of the year, reflecting the impact of plant maintenance work and lower production in response to a seasonal drop in demand. The drop in supply is usually steepest in the month of February rather than January.

Even so, the drop in supply this year was unusually steep. The size of the fall partly reflected the firmer level in December. It also reflected the simultaneous fall in base oils production in several major markets like Netherlands and Italy.

Supply fell even before a round of plant maintenance work in the region gathered pace from March, and before a slowdown in shipments from Russia.

It also fell before base oil margins faced an even tighter squeeze from a surge in feedstock prices in February.