Spain’s November base oils supply falls

Spain’s base oils supply fell to a thirteen-month low in November, curbing the pace of a build-up in surplus volumes in the face of slowing lube demand.

The drop in availability of both Group I and premium-grade base oils in Spain coincided with a similar fall in Group I base oils production in Italy in November.

Base oils production fell in both countries despite the lack of any planned plant maintenance work and despite a rise in Spain’s total refined products output.

The higher oil products output instead reflected a rise in middle distillates production. Italy’s diesel output also rose in November.

Increasingly firm diesel prices relative to crude incentivized such moves. Sliding base oils prices by comparison incentivized refiners to cut output of the lubricant feedstock.

European base oils prices weakened even further relative to crude and diesel in January, raising the prospect of a continuation of the strategy.

Prices fell because of weak demand that complicated sellers’ moves to find outlets for surplus supplies.

Lower base oils output late last year and early this year would cut the size of that surplus and come just weeks ahead of a seasonal rise in lube demand in the region.

Spain’s base oils supply of around 57,000t in November fell from more than 75,000t the previous month to the lowest since late 2021, government and port data showed.

Output of Group I base oils fell to its lowest in a year and below production levels even during planned plant maintenance work in the second quarter of last year.

The drop in Group I base oils output to less than 0.5pc of Spain’s total refined products output contrasted with a rise in the share of diesel output to more than 40.5pc of the total.

The diesel share held above 40pc for a second month and at its highest since early 2021.

Lower Group I base oils output coincided with a dip in Spain's premium-grade base oils shipments in November to a nine-month low.