Americas/EMEA base oils - week of May 22: Demand outlook

·        US central bank’s next move on interest rates generates more uncertainty than recent moves, with expectations mixed on keeping rates unchanged or another rise. 

·        US gasoline demand rises over past week for eighth straight week.

·        Firmer fuel demand coincides with rising US retail sales in April.

·        Seasonal rise in US base oils demand stays more muted than usual.

·        Extension of the trend would leave blenders with lower-than-usual stocks heading into Atlantic hurricane season.

·        Latin Americas’ lube demand growth shows signs of holding firm in Q1 2023, contrasting with slower consumption growth in Europe and Asia-Pacific.

·        Trend incentivized base oils suppliers in other regions to target Latin America with additional volumes.

·        Latin America’s lube demand growth likely to outpace Europe’s demand over coming months, boosting attraction of targeting that market with more base oils supplies.

·        Latin American demand for US supplies likely to improve amid slowdown in arbitrage shipments from Asia.

·        Europe’s central bank expected to raise interest rates further amid still-high core inflation.

·        Europe’s Q2 lube demand set to rise from Q1 2023, which already rose strongly from Q4 2022.

·        Europe’s lube demand likely to outpace Asia-Pacific lube demand over coming months, curbing surplus base oils supply for export.

·        Spain’s March lube demand rises strongly from February and from year-earlier levels, adding to blenders’ need to replenish base oils stocks.

·        Portugal’s Q2 lube consumption typically rises from Q1, after demand already rose in March to a one-year high.

·        Smaller-than-usual rise in France’s lube demand in March from February leaves blenders with more supplies, curbs urgency to replenish stocks.

·        Sustained fall in year-on-year demand adds to blenders’ preference to maintain lower stocks.

·        Europe’s Q3 lube demand likely to slow from Q2, while firm base oils values incentivize refiners to maintain higher output.

·        Trend raises prospect of rising surplus supply in Europe in Q3 2023.