August US base oil production rose by 3.7pc to 178,520 b/d, its highest total for that month since 2018, according to the Energy Information Administration (EIA).
Elevated base oil inventories were supported by declining four-week average ultra-low sulphur diesel prices in the US Gulf coast that kept base oil prices at a premium. Refiners typically push more vacuum gasoil feedstock towards whichever product has higher pricing.
- US lubricant products supplied, a proxy for domestic demand, fell by 6pc in August to 101,740 b/d, down from 108,290 b/d a month earlier because domestic demand was waning following the end of peak US summer driving season.
- Paraffinic base oil production rose by 10pc from year-earlier levels, and 3.4pc from July levels to 153,550 b/d, as refiners continued to build up hurricane inventories.
- Base oil production gains were led by the US midcontinent region because several Group I refiners were recovering from recent turnarounds.
- Base oil output declined in the US Atlantic region because of waning demand in the industrial and metal working sector in mid-August.
- Naphthenic production rose by 9.8pc to 24,970 b/d from year-earlier levels and by 6pc from July totals.
- Naphthenic demand continued to be supported by firm demand for transformer oils and steady activity in the tire/rubber sectors.
- August EIA export data was estimated using July totals because recent Census trade data is unavailable due to the ongoing partial US government shutdown. Monthly export numbers are unchanged because of the lack of new data.
| US paraffinic base oil output by region | b/d | ||
| Region | 25-Aug | 25-Jul | m-o-m±% |
| US Gulf coast | 119,900 | 113,130 | 6 |
| Texas Gulf coast | 53,580 | 52,000 | 3 |
| Louisiana Gulf coast | 58,550 | 55,650 | 5 |
| US Midcontinent | 8,840 | 8,070 | 10 |
| US Atlantic coast | 5,230 | 7,260 | -28 |
| Paraffinic total | 153,550 | 148,550 | 3.4 |
| Energy Information Administration (EIA) | |||
