· US base oil export prices stay unusually weak versus VGO prices.· Persistent supply surplus and low export prices point to limited moves by refiners to trim production rates.· Trend could reflect margins that are sufficiently firm for most products, with products like mid-viscosity grades cleared to market like India.· Persistent supply surplus maintains importance of high base oils exports to limit domestic supply-build..· US’ January base oils exports instead fall to thirteen-month low, at a time of year when domestic lube demand is typically weak..· Drop in exports could reflect possibility of unplanned fall in US base oils production in Jan 2024, when freezing weather disrupted crude oil production in the country. · Base oils exports fall despite US export prices remaining unusually competitive relative to prices in overseas markets.· Drop in exports could also reflect moves by US refiners to redirect light-grade base oils into distillates pool.· Unusually weak US export prices relative to feedstock and competing fuel prices boosts attraction of such moves.· Signs of sustained slowdown in Mexico’s requirements for US base oils adds to attraction of such moves..· US’ January base oils imports fall for ninth month even as shipments from Mideast Gulf rise..· Supplies from Mideast Gulf account for rising share of US imports, suggesting weaker US demand has larger impact on supplies from Asia.· Even so, US imports from South Korea show signs of rebounding in Feb 2024..· Europe’s weak base oil values relative to feedstock and competing fuel prices curb incentive for region’s Group I refiners to increase output.· Weak margins point to sufficient supply and weak demand even as export availability tightens.· Any signs of tighter-than-expected supply or stronger-than-expected demand could prompt price reaction that reflects the firmer-than-expected fundamentals.· Europe’s Group II base oils supply could stay tighter as regional plant maintenance work coincides with slowdown in US shipments to Europe in early 2024.· Europe’s Group II base oils price premium to feedstock prices holds well below Jan 2024 levels and below year-earlier levels.· Lower premium curbs incentive for rise in region's base oils output, pointing to sufficient supply.· Steep premium of Europe Group II prices to US export prices keeps arbitrage open, pointing to insufficient supply.· Exports of premium-grade base oils from the Spain’s port of Cartagena rise in Feb 2024, with steady volumes moving to northwest Europe..· Slowdown in Group III shipments from UAE to Europe at end-2023 shows signs of extending into 2024 as more cargoes move to US and India.· Nigeria’s base oils supply shows signs of rising sharply in March 2024 as a wave of shipments arrive from US, Europe and Russia.· Slowdown in Saudi Arabia’s base oils exports shows signs of extending into March 2024.· Trend could boost demand for supplies from other markets, especially in outlets like Mideast Gulf and India..Americas/EMEA base oils demand outlook: Week of March 18.Asia base oils supply outlook: Week of March 18.Global base oils margins outlook: Week of March 18
· US base oil export prices stay unusually weak versus VGO prices.· Persistent supply surplus and low export prices point to limited moves by refiners to trim production rates.· Trend could reflect margins that are sufficiently firm for most products, with products like mid-viscosity grades cleared to market like India.· Persistent supply surplus maintains importance of high base oils exports to limit domestic supply-build..· US’ January base oils exports instead fall to thirteen-month low, at a time of year when domestic lube demand is typically weak..· Drop in exports could reflect possibility of unplanned fall in US base oils production in Jan 2024, when freezing weather disrupted crude oil production in the country. · Base oils exports fall despite US export prices remaining unusually competitive relative to prices in overseas markets.· Drop in exports could also reflect moves by US refiners to redirect light-grade base oils into distillates pool.· Unusually weak US export prices relative to feedstock and competing fuel prices boosts attraction of such moves.· Signs of sustained slowdown in Mexico’s requirements for US base oils adds to attraction of such moves..· US’ January base oils imports fall for ninth month even as shipments from Mideast Gulf rise..· Supplies from Mideast Gulf account for rising share of US imports, suggesting weaker US demand has larger impact on supplies from Asia.· Even so, US imports from South Korea show signs of rebounding in Feb 2024..· Europe’s weak base oil values relative to feedstock and competing fuel prices curb incentive for region’s Group I refiners to increase output.· Weak margins point to sufficient supply and weak demand even as export availability tightens.· Any signs of tighter-than-expected supply or stronger-than-expected demand could prompt price reaction that reflects the firmer-than-expected fundamentals.· Europe’s Group II base oils supply could stay tighter as regional plant maintenance work coincides with slowdown in US shipments to Europe in early 2024.· Europe’s Group II base oils price premium to feedstock prices holds well below Jan 2024 levels and below year-earlier levels.· Lower premium curbs incentive for rise in region's base oils output, pointing to sufficient supply.· Steep premium of Europe Group II prices to US export prices keeps arbitrage open, pointing to insufficient supply.· Exports of premium-grade base oils from the Spain’s port of Cartagena rise in Feb 2024, with steady volumes moving to northwest Europe..· Slowdown in Group III shipments from UAE to Europe at end-2023 shows signs of extending into 2024 as more cargoes move to US and India.· Nigeria’s base oils supply shows signs of rising sharply in March 2024 as a wave of shipments arrive from US, Europe and Russia.· Slowdown in Saudi Arabia’s base oils exports shows signs of extending into March 2024.· Trend could boost demand for supplies from other markets, especially in outlets like Mideast Gulf and India..Americas/EMEA base oils demand outlook: Week of March 18.Asia base oils supply outlook: Week of March 18.Global base oils margins outlook: Week of March 18