Europe’s July lube demand falls

Lubricating oil demand in Europe’s four largest economies fell in July for the tenth time in 11 months even before an expected economic contraction throughout much of the region.

Lube consumption of 182,600t in Germany, France, Spain, and Italy combined fell from around 186,000t in June and by 6pc from year-earlier levels, government and industry data showed.

The sustained drop in demand cut total lube consumption to 1.31mn t in the first seven months of the year. The volume was down 6pc from 1.39mn t during the same period last year.

Europe’s lube demand slowed even as the region enjoyed a brief economic lift following the removal of pandemic-related restrictions earlier in the year.

The moves triggered a pick-up in the services industry especially and a rebound in tourism activity during the summer months.

The recovery was short-lived and weaker than expected because of the surge in energy costs and rising inflation from the start of the year.

Weak economic growth is forecast to turn negative in many countries in the region over the coming months.

Demand for industrial oils shrank more than automotive lubricants in the first seven months of the year. The trend could change as a likely slowdown in the services sector includes a drop in travel activity.

Weaker lube consumption eased the impact of tight regional base oils supplies in the first half of the year. Base oils prices still rose sharply during that period.

Availability of base oils supplies improved during the third quarter of the year and are likely to remain more readily available over the coming months.

European base oils prices fell in the third quarter of the year as rising base oils supply and shrinking lube demand flipped tightness to surplus.

Prices are likely to remain under pressure until the supply-demand dynamic returns to balance.