U.S. Base Oil Output Shrank in July

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U.S. Base Oil Output Shrank in July

Base oil output in the United States retreated in July, dipping slightly below the level produced in June and falling below amounts produced before the COVID-19 crisis after two consecutive months of running ahead.

The nation’s refiners produced 5.6 million barrels of mineral base oils in July, according to data published last week by the U.S. Energy Information Agency, after churning out 5.7 million barrels the previous month. The total was up 15% from 4.9 million barrels in July 2020. July’s total was 4% lower than the average for that month from 2015 to 2019 – the five years before the coronavirus pandemic.

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Output for June and May of this year was 4% and 2% higher than the respective five-year averages for those months preceding COVID-19. The July output was up 15% from 4.9 million barrels in July 2020.

U.S. base oil production steadily rebounded during the second half of 2020 after bottoming out in May and June of last year, when lockdown measures aimed at containing the pandemic were at their most stringent. Output returned to pre-pandemic levels in November of last year and again in January of this year before falling back in February due to refinery shutdowns caused by unusually severe cold weather in the Southwest that month.

When the EIA publishes data for August at the end of this month it could show a further decrease in production due to impacts from Hurricane Ida, which struck the Gulf of Mexico coast on Aug. 27. The Gulf Coast has a large proportion of U.S. base oil capacity, and several plants closed temporarily in the face of the storm. Little damage resulted, though, so the impact on base oil output will likely be less than from some other storms that have caused more damage.

The July decline all came from the paraffinic segment of the market. Refiners made 4.7 million barrels of paraffinic base stocks that month, down from 4.9 million barrels in June of this year and 6% less than the average for that month in the five years before the pandemic. Output of naphthenic oils reached 902,000 barrels, up from 800,000 barrels in June and 6% higher than the five-year average preceding the coronavirus crisis.

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