U.S. Base Oil Output Jumped in May

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U.S. Base Oil Output Jumped in May

Base oil production in the United States jumped to 5.6 million barrels in May, according to the latest data from the U.S. Energy Information Agency, showing its strongest signs yet of recovery from the COVID-19 pandemic.

May’s output was the highest for any month in nearly two years. It was also 2% higher than the average production for the five Mays between 2015 and 2019 – before the coronavirus crisis began.

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Concerns remain, though, both about the possibility of a new wave of coronavirus infections and is forecast to be more active than average.

June was just the third month since the start of the pandemic that U.S. base oil production bettered the average for the corresponding month from the preceding five years. June’s total was 2% better than that average, while January’s was 1% better and November ran ahead by 4%.

During the worst economic impacts from the crisis during the spring of last year, base oil output declined by 25%, but production gradually recovered as the economy rebounded. The industry suffered a setback in February when severe winter weather caused widespread power outages in Texas, home to the largest chunk of the nation’s base oil capacity.

June’s output represented a 24% jump from the previous month and was higher than any month since July of 2019, which topped 5.6 million barrels.

Refiners made 4.7 million barrels of paraffinic base oils, which was 1% more than the five-year average for that month preceding the pandemic. Naphthenic base oil output was 905,000 barrels, which was 7% higher than the five-year average.

Finished lubricant and base oil demand recovered as the U.S. economy rebounded from last year’s throes of the pandemic, but concerns are rising that governments may re-impose restrictions if infections continue to rise. Numbers of new cases and hospitalizations are now at their highest levels nationally since the first quarter.

Hurricane season is always a threat to base oil supply because of the large number of plants lining the Gulf of Mexico coast. In May the National Oceanic and Atmospheric Administration estimated that there is a 60% chance that this year’s season will be more active than average. The season began on June 1 and runs through Nov. 30.

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