May US base oil exports fell amid inventory builds

US base oils and finished lubricants exports in May fell by 14pc from year-earlier levels as refiners directed more surplus into inventories to prepare for hurricanes instead of the export market.

Base oil and lubricant exports were 3.53mn bl (113,900 b/d) in May, down from 4.08mn bl (131,900 b/d) a year prior, according to the US Energy Information Administration (EIA). Monthly exports fell by 7.5pc from April totals of 3.82mn bl (127,300 b/d).

Several US refiners started pulling back export volumes because of efforts to build hurricane inventories for the US Atlantic hurricane season. The season typically lasts between August and October along the US Gulf coast. The season was forecast to be more intense than average, which pressured US refiners to build more inventory than in 2023.

Export demand remained firm as Group I and Group II supplies tightened globally because of multiple refinery turnarounds, particularly in Europe. South American base oil prices also started to increase as a key domestic refiner raised its pricing in Brazil. This opened up more arbitrage opportunities for US Gulf coast refiners.

US exports to Mexico in May were 1.35mn bl, steady with year-earlier levels of 1.36mn bl. Monthly exports to Mexico fell by 3.7pc from April totals of 1.42mn bl.

Export volumes to Mexico remained above expectations as import quotas imposed by the government appeared to have less effect than planned. The import quotas took effect in October 2023 and put some downward pressure on volumes from a year-over-year basis.

Exports to Brazil were 323,000 bl in May, down by 15pc from 373,000 bl in 2023. Monthly exports also fell by 17pc from 377,000 bl in April.

Arrivals of US material to Brazil in May fell as a key refiner lowered its domestic prices in April, which narrowed arbitrage during that month. Exports were lower from year-earlier levels as refinery production in Brazil was higher. A key supplier in the region began delaying deliveries of some grades, which increased import requirements for the domestic market.

Exports to Chile reached their highest monthly record since 2010, totaling 142,000 bl in May.

US exports to Belgium, France and the Netherlands totaled 289,000 bl in May, a 54pc decrease from year-earlier levels of 635,000 bl. Monthly exports dropped by 51pc from April totals of 585,000.

Base oil exports to India fell to 62,000 bl, down by 84pc from year-earlier totals of 377,000 bl. There were no reported exports to Nigeria in May.

By Karly Lamm and John Dietrich