While base oil supply in the domestic market appeared adequate to meet demand, an ongoing plant turnaround, reduced base oil output at refineries as a result of increased distillates production and growing consumption might lead to tighter availability of certain grades.
Many base oil producers finished the year with fairly ample inventories, but a combination of factors may allow for a balanced-to-tight scenario to emerge in coming weeks. Demand for both base oils and finished lubricants has generally improved in the United States – which is typical for this time of the year – although it was not yet “quite as strong as at this time last year,” a source commented. January posted price decreases were said to have triggered heightened buying appetite, but consumers were still cautious as downward price pressure persisted. They preferred to secure smaller quantities to avoid holding high-priced inventories if values did soften later.