U.S. refinery production of base oils in the years first half took on a slight lilt, and reached 28.6 million barrels. Thats a gain of 2.9 percent over the 27.8 million barrels produced in the same period in 2013.

Paraffinic base stock output from January to June this year swung to 24 million barrels, representing 86 percent of the total, while naphthenic base stock production reached 4.6 million barrels, according to data released last month by the U.S. Energy Information Administration.

The steady hum of base oil refining was punctuated occasionally by planned and unplanned outages, and briefly muted by the bitter blast of winter. There was also a note of dissonance as market players wondered how and when new volumes from Chevrons Pascagoula, Miss., plant would show themselves. Yet supply and demand mostly managed to stay in harmonious balance through the first half of the year, sources agreed.

January saw hefty price decreases, resulting in paraffinic prices shedding between 10 cents and 30 cents per gallon. The market was slightly oversupplied. Motiva began a turnaround for a catalyst change at the smallest of its three trains in Port Arthur, Texas, which was completed in February.

Februarys winds blew hard against U.S. refiners, and output fell to its lowest point in 13 months. Margins remained lean because feedstock prices were high and base oil prices relatively low. Paraffinic producers were seen to trim operating rates to avoid a product overhang. On the pale oil side, tight volumes persisted as unplanned production issues were caused by severe winter conditions at Calumet and other companies. On Feb. 5, Cross Oils 5,000 barrel per day naphthenics plant in Smackover, Ark., was shut down following a small fire (or minor upset as they characterized it); it was sidelined until late March. Meanwhile, pale oil producer San Joaquin underwent a 10-day turnaround at its refinery in Bakersfield, Calif., coming back on March 1.

March: Base oil demand in general was impacted by adverse weather, and the spring buying season started quite late in the month – weeks later than usual. Chevron led the years first round of price increases, which ranged from 5 cents to 30 cents per gallon depending on supplier and grade. Paulsboro Refining had a turnaround at its API?Group I plant in New Jersey (11,000 b/d) lasting from March into April, and Calumet completed a one-week turnaround at its 6,900 b/d naphthenics plant in Princeton, La., in mid-March.

April: Calumet conducted a 20-day turnaround at its Shreveport, La., plant which has 4,800 b/d Group I and 7,000 b/d Group II capacity.

May, blissfully uneventful, saw base oil production hit a first-half peak of 5.2 million barrels. Both paraffinic and naphthenic suppliers posted the years best month to date.

June: The 22,000 b/d Excel Paralubes plant in Westlake, La., started a 45-day turnaround, which would last until early August. The Group II segment remained tight as the summer driving season began.

Outs and Ins

Significant volumes of U.S. base oil travel abroad each month to buyers in foreign markets, according to the EIA data, while lesser amounts flow in, making for a positive balance of trade.

The country exported a total of 13.1 million barrels in the years first half, a nice upswell from the 12.5 million barrels exported in first-half 2013. Viewed another way, U.S. base oil exports averaged 72,000 b/d from January to June this year, up from 69,500 b/d for the same months in 2013. Viewed a third way, of every 100 barrels of base oil the United States produced, 45 floated beyond its borders.

Geographically, the biggest recipients for these base oils continue to be neighbors Mexico and Canada, where more than a quarter of the shipments went. The Caribbean, Central and South America, especially Brazil, also have large appetites for U.S. base oils, and one third of the exports headed to that region. Sizable quantities also made their way to Europe, especially via Belgium, and to Singapore.

By contrast, foreign products had a tougher time getting a foothold in the U.S. market. Base oil imports reached 5.1 million barrels in the first six months, versus 6.4 million barrels in first half 2013. Thats a 20 percent decline.

Imports from one of the countrys largest trading partners, South Korea, suffered quite a bit in the first six months of this year and amounted to just 1.52 million barrels, a 30 percent drop from the prior-year period. Still, South Korea did manage narrowly to edge out Canada, which sent 1.47 million barrels into the United States from January to June.

Another decline was seen in volumes coming from Qatar, which in first-half 2013 sent 1.4 million barrels to the United States. Qatar began this year at a similar swift pace, landing 780,000 barrels from January to March, but then stuttered to around one-sixth of that volume – 123,000 barrels – during the following three months.

Qatars base oil comes from the Shell-Qatar Petroleum gas-to-liquids joint venture, Pearl, which has 28,000 b/d of Group II and III capacity. Since its second base oil train began operating in 2012, Pearl had been sending parcels amounting to about 300,000 barrels to the United States every other month. So this April-through-June decline represents a steep fall-off in its U.S.-bound shipments. For now, Shell remains the exclusive user of Pearls base oil, which goes into its branded lubricants business.

Besides the faltering volumes from South Korea and Qatar, what else might be behind the decline in imports? For one thing, U.S. refined products continued to hold a cost advantage, so there was little or no opportunity for arbitrage from Asia and Europe. Second, supply was said to be fairly tight in Asia during the first quarter, so refiners in that region were not in a great position to export, sources remarked. As the summer waned, availability began to ease to the point where the Asian market is actually said now to be oversupplied, especially as a lot of U.S. Group II cargoes have begun making their way to India.

Wax Slackens

U.S. production of wax, a key byproduct of the solvent refining process that makes Group I base oils, also tipped downward in the years first half, to reach a total 1.25 million barrels. Thats a 17 percent decline from the 1.5 millon barrels produced in the first six months of 2013, and 19 percent below 2012s first-half output.

Wax exports were relatively steady throughout the years first six months, and totaled 960,000 barrels, similar to what was seen in the first six months of 2013. Imports of wax nearly matched the outflow, with 930,000 barrels imported from January to June of this year, EIA data show.

Sources caution that U.S. wax volumes are about to take a steep nosedive, as ExxonMobil upgrades

the product slate at its Baytown, Texas, refinery. According to the American Fuel & Petrochemical Manufacturers, Baytown has 5,000 b/d of unfinished wax capacity. Now, as part of the companys plan to make more Group II and II+ base stocks there, this is going away. The company reportedly has advised customers that shipments of wax from Baytown will end this month.

ExxonMobil can still produce wax in Baton Rouge, La., and Beaumont, Texas, with their combined capacity of about 4,300 b/d, but the reconfiguration at Baytown is erasing at least 3,000 physical barrels a day from the market. Total U.S. refinery production of wax has been roughly 8,000 b/d for the past four years, so this loss will be felt acutely.

LubesnGreases base oil reporter Gabriela Wheeler contributed to this article.