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U.S. lubricant base oil production declines

2020-05-22 14:14:23

U.S. base oil production fell 9% in 2019, according to recent data from the Energy Information Administration. Total lubricant base oil production fell to 60.9 million barrels in 2019 from 67.3 million barrels in 2018.


Global base oil production capacity has grown significantly over the past few years, and overcapacity has continued to compress margins, prompting some refineries to divert base oil feedstock vacuum gas oil to other uses, such as the production of marine fuels and diesel fuel. Industry sources say that could be part of the reason for the decline in U.S. base oil production in 2019.


Prices and margins have been challenged, leading to production adjustments, with more feedstock being diverted into the VGO market for bunker fuel or other diesel-based products. There were also major overhauls at some refineries in the second half of 2019. U.S. base oil shipments to Central and South America fell nearly 10% to 6.6 million bpd in 2019 from 7.3 million bpd in 2018. This may be related to the political turmoil in several Latin American countries last year and high inflation in the region. Argentina, which had inflation at 54% in 2019, imported just 370,000 barrels of U.S. base oil last year, down from 878,000 barrels in 2018. Ecuador's base oil imports from the United States plunged to 668,000 bpd last year from 1.2 million bpd in 2018.