The oversupply of base oils that rapidly developed during the third quarter now appears to be gradually defusing, thanks largely to many refiners shift feedstock away from base oils to increase production of fuels.
The surplus had been building most rapidly for API Group I base stocks in Europe.
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Group II and Group III base oils are also being affected, although not to the same extent as the Group I camp. For example, European Group III imports from the Middle East Gulf have declined as producers from the latter region are sending more material into the United States, a market where margins are more acceptable and demand is at an all-time high.