As the market headed into the New Year’s weekend, activity has quieted down given that this holiday is one of the most widely celebrated festivities in Asia, with many businesses closing for a few days. The lead-up to the holiday rendered few fresh trades because prices had weakened the previous week and buyers delayed purchases, expecting values to continue under downward pressure. However, an arctic storm in the United States has caused several refineries to shut down, and this could result in reduced base oil supplies and a potential need for imports, possibly from Asia.
While it was not yet clear whether the unplanned shutdowns at several refineries along the U.S. Gulf Coast during Winter Storm Elliott would have an impact on base oil availability, market players kept an eye on possible product shortages. A similar situation had emerged during a freezing weather snap in February 2021, when several U.S. base oil plants were forced to shut down due to power outages and equipment failures. Most buyers and suppliers enter the new year with low inventories and any supply disruptions would have a greater impact than during other times of the year, sources conjectured.