Europe’s April base oils supply rises

Base oils supply from seven countries in Europe recovered in April to a four-month high as rising output in markets like Netherlands and Germany countered a sustained fall in production in Italy.

Total base oils supply of more than 317,000t in April rose by 16pc from less than 274,000t the previous month, government data showed.

The supplies mostly originated from sources in western and southern Europe.

Total supply of 1.17mn t in the first four months of the year was down 27pc from 1.61mn t during the same period a year earlier.

The volume was the lowest for that four-month period since 2019, when a new plant in Europe was starting operations.

European base oil prices had surged in first-half 2021 in response to unexpectedly tight supply and firm demand.

Regional base oil supplies were much lower this year than last year. The flow of shipments of Russian origin to Europe has also fallen sharply, especially compared with last year.

Base oil prices have risen again. But the strength of the increase has been weaker than last year.

Prices rose to unusually steep premiums to crude and diesel during first-half 2021. Their premium to crude and diesel has been much lower this year, even with supplies at lower levels.

The price trend suggested the influence of other factors.

Europe’s lubricating oil demand has fallen sharply this year compared with last year. The lower demand cut the supply shortfall.

The flow of shipments from US to Europe has also surged this year. The rise in shipments has trimmed further the gap between regional supply and demand.