UK’s September base oils output falls

The UK’s base oils output fell to a six-month low in September amid signs refiners were focused on maximizing middle distillates production.

Moves to produce more diesel mirrored a similar trend in Italy, where base oils output also remained unusually low in September.

Refiners focused on producing more middle distillates in view of Europe’s tight supply and high price for the motor fuel. Europe’s diesel stocks fell by end-August close to their lowest since 2018.

There was less incentive to produce more base oils in view of its falling price and rising surplus supply.

The lower base oils output in markets like UK and Italy raised the prospect of curbing the size of the surplus.

The UK’s base oils output of 11,410t in September fell from more than 28,000t the previous month, government data showed. The volume was the lowest since March, when output fell below 2,000t.

The fall in output cut the UK’s base oils production to 205,610t in the first nine months of the year. The volume was down 18pc from 252,080t during the same period last year.

It was almost the same as output of 200,020t during the first nine months of 2020.

Demand in Europe slumped during that period because of lockdowns throughout the region to slow the spread of the Covid-19 virus.

The UK’s base oils output fell at a time of year when regional lube demand typically revives after a slowdown during the summer months.

The pick-up in lube demand was smaller than usual this year as slowing economic growth curbed industrial lubricants consumption especially.

The slump in the UK's base oils output contrasted with a 1pc fall in the country’s refined products output in September.

The trend cut base oils’ share of refined products output to less than 0.3pc of the total. The share was down from almost 0.7pc in August and close to 1pc in July.

Diesel and jet fuel accounted for 33pc of total output in September. The share held close to that level since April, after averaging around 30pc in 2021.