US’ July base oil, lube exports to Europe fall

US base oil and lube exports to Europe fell in July to their lowest level in more than five years even as demand in this market was reviving.

Total base oil and lube exports of 242,000 bl in July fell by 26pc from an already low 327,000 bl the previous month, according to the EIA. Exports of 2.77mn bl to Europe during January-July fell by 31pc from 4mn bl during the same period last year.

The contraction in July mostly reflected a slump in shipments to Belgium to just 158,000 bl. The volume was the lowest since August 2015.

Producers in several other markets like Asia-Pacific and the Mideast Gulf also cut their exports to Europe during the second quarter of the year in response to a slump in the region's lube demand. Plant run cuts and maintenance added to the slowdown in shipments.

But a revival in demand began from June as European blenders sought to replenish low stocks. The move coincided with a pick-up in finished lube demand, especially for engine oils.

Tight Group III supplies in Europe then triggered a sustained rebound in prices of the premium-grade product from the end of the second quarter. European Group II prices failed to match this rebound, despite the sustained fall in shipments from the US.

The steadier Group II prices partly reflected their relative price strength compared with Group I and Group III prices during the second quarter of the year. Regional Group II base oil production also rebounded in July to a record high.

By Iain Pocock