The UK’s base oils output fell in October, mirroring a similar slide in production in markets like Italy and adding to a sharp dip in Europe’s Group I base oils supply at the start of the fourth quarter of the year.The drop in supply raised the prospect of limiting the size of any build-up of surplus volumes of Group I base oils at the end of last year, when demand faced a seasonal slowdown.The UK’s base oils output of 30,800 tonnes in October fell from close to 46,000 tonnes the previous month, government data showed.The drop in output, combined with lower production in Italy and a dip in Europe's Group I imports, cut the region’s Group I base oils supply to less than 165,000 tonnes in October.The volume fell from more than 210,000 tonnes in September to an eight-month low.Europe’s Group I base oils exports to markets outside the region rose to an eight-month high in October, compounding the drop in regional supply.Any subsequent recovery in supply in November and December faced pressure from scheduled plant maintenance work in Spain during that time.Italy’s lower production capacity following a plant closure earlier in the year limited the size of any rebound in output in that market.Europe’s Group I base oils prices reflected the tighter supply.The region’s export prices fell in the final two months of last year as a seasonal slowdown in demand freed up more surplus volumes.But the export prices maintained a steep premium to prices in outlets like the Middle East.The high price premiums complicated arbitrage opportunities and suggested that any pressure from a rise in surplus supplies was smaller than usual for the time of year.Concern about the availability of large volumes of surplus supplies and downward price pressure typically incentivizes regional buyers to hold off at the start of each year.Signs of smaller-than-usual volumes of surplus supply could by contrast curb downward pressure on prices and trigger an earlier-than-usual pick-up in regional demand at the start of the year..Netherlands’ Oct base oils output rises.Europe Oct Grp III supply stays low.Italy’s October base oils output falls
