Singapore’s May base oil exports slide

Singapore’s base oil exports fell in May to a seven-month low amid a drop in supplies from domestic producers.

Exports of 139,320t in May fell by 19pc from 171,170t the previous month to the lowest since last October, government data showed.

Even with the slowdown, total exports of 818,800t in the first five months of the year remained 4pc higher than year-earlier levels of 791,000t.

The slide in May shipments came at a time when regional base oil prices were unusually low relative to crude and diesel, and demand remained weak in the key market of China.

The weaker buying interest has coincided with higher regional supply compared with year-earlier levels.

The combination of weak margins and soft supply-demand fundamentals has incentivized refiners to produce more middle distillates instead.

The drop in Singapore base oil shipments mostly reflected a fall in exports from domestic suppliers.

These fell to 107,790t in May, from almost 140,000t the previous month. The volume was the lowest since last July, when domestic base oil production begun to revive after a prolonged slowdown.

A surge in imports during that slowdown had helped to sustain firmer exports. But monthly import volumes were now much lower than in first-half 2021.

Regional base oil supply remained at healthy levels even with the slowdown in shipments from Singapore. A steady flow of arbitrage shipments continued to be lined up to move surplus volumes to more distant markets.