US’ January base oil, lube exports fall

US base oil and lube exports fell in January to a seven-month low on tight surplus supply ahead of a heavy round of planned maintenance at a few paraffinic and naphthenic base oil plants across the country.

Total exports of 2.92mn bl in January fell from 3.08mn bl in December to their lowest level since June 2020, according to the Energy Information Administration.

Exports fell as several producers built inventories or maintained higher stocks to cover requirements during upcoming maintenance in the first quarter of the year. A few Group I producers were set to have planned maintenance early in the second quarter.

Any surplus supplies for export consisted mostly of light and very-light grade base oils.

Large volumes of these supplies had been moving to Mexico in recent years. But shipments to Mexico slid to 900,000 bl in January, down by 11pc from 1.02mn bl in December.

Rising US base oil prices on an outright basis and relative to diesel prices dampened the attraction of moving light-grade base oils from the US into Mexico's diesel extender market.

Argus' export spot US Group II N100 base oil prices rose by $0.36/USG in January to their highest level since 2014. Their premium to diesel rose to the highest since 2012.

Exports of 299,000 bl to Brazil in January fell by 41pc from 508,000 bl in December to an eight-month low. The drop in shipments coincided with a sustained recovery in Brazil's Group I base oils production.

The slowdown in Mexican demand boosted the attraction of moving light-grade supplies to India, where buyers were willing to pay higher prices than buyers in Mexico.

Exports of 232,000 bl to India in January rose to their highest since August 2020. Exports had declined after Hurricane Laura struck the southwest Louisiana Gulf coast at the end of that month.

The storm knocked out production at several key US Gulf coast (USGC) refineries for 6-8 weeks. The extended unplanned shutdowns added to the supply tightness in the USGC from September 2020 through to this year.

Tighter supplies and strong overseas demand have since lifted and sustained US spot export prices at a premium to domestic spot prices.

By John Dietrich