Italy’s April base oil stocks slide

Italy’s base oils stocks fell in April for a sixth month to their lowest in more than seven years amid a sustained slump in the country’s production.

Base oil inventories of 54,720t in April fell from 63,120t the previous month, government data showed.

The volume was down by 35pc from more than 85,000t the same month a year earlier and the lowest since at least 2015.

Stock levels have averaged less than 64,000 t/month so far this year, down from around 95,000 t/month in 2021.

European Group I base oil prices had risen strongly in 2021 because of tight supply and strong demand throughout the region.

Prices have risen again this year on the back of tight fundamentals and high crude and diesel prices.

But Europe’s Group I prices relative to diesel remain much lower than year-earlier levels, despite the prolonged drop in supply from Italy. The country is a key source of Group I base oils in the region.

A fall in Group I shipments from Russia to Europe has compounded the supply tightness.

Europe’s lube demand has slowed in a growing number of countries. But the slowdown has been smaller than the drop in supplies.

Even so, this year’s smaller rise in Group I base oil prices relative to crude and diesel suggest that supply is less tight than last year.

The dynamic suggests buyers are sourcing Group I base oils from other regions or that they are using other types of base oils in place of Group I.