· US base oils export-price premium to VGO falls close to lowest level this year..· Price-premiums fall to bottom of relatively narrow range since late last year.· Narrow price-range over extended period suggested that any pressure from surplus supply remained manageable during that period.· Drop in price-premium to bottom of that range suggests surplus supply may be building to levels that require adjustment in output, in addition to high exports..· Reversion of supply to more manageable levels would curb pressure to make the kind of marked price adjustments that prompt buyers to hold back.· Concern about rise in surplus supply increases importance of exports staying at elevated levels to clear overhang and to balance out weaker domestic demand.· Maintaining exports at elevated levels in H1 2025 already points to priority of clearing surplus volumes even if at expense of lower price.· US base oils stocks stay unusually low in June 2025 even as they edge up from previous month..· Small rise in stocks highlights benefit of maintaining high exports.· Any slowdown in exports would conversely likely speed up pace of stock-build.· Supply could get further boost in coming weeks if refiners, distributors and blenders start to cut their inventories.· Any moves to cut inventories in coming weeks would overlap with maintenance work on several plants in Sept-Oct 2025.· Any moves to cut inventories in coming weeks could also leave market more exposed to any weather-related supply disruptions.· Lack of any such disruptions would conversely leave market with larger volumes to clear.· Lack of any such weather-related disruptions in US Gulf coast region this summer extends into H1 Sept 2025 after tropical wave in Atlantic dissipates in recent days.· US Group III base oils supply set to get boost in H2 Sept and H1 Oct 2025, when swathe of shipments from Middle East and Asia are scheduled to reach US Gulf coast.· Latin America’s base oils supply likely to remain at healthy levels amid signs of rise in shipments from US set to reach Brazil and Argentina in Sept 2025.· Volume of US-origin shipments reaching Argentina in Sept 2025 shows signs of rising well above typical levels.· Ongoing pause in large base oils shipments from Argentina to overseas markets could point to ongoing stock-replenishment after slump in net supplies in July 2025..· Recent fall in Europe Group I base oils export prices points to rise in surplus supply and pressure to clear the volumes.· Europe’s Group I base oils supply already rises to five-month high in June 2025 even ahead of seasonal slowdown during summer months..· Supply could get further boost in Q3 2025 as completion of plant-maintenance work and firm margins support higher output.· Excluding exports to markets outside Europe, Group I supply rises in June 2025 to highest since Sept 2024..· Rising supply increases importance of firm regional demand and exports during Q3 2025 to limit build-up of surplus volumes.· Regional demand instead faced seasonal slowdown, especially in month of August.· Rising supply increases importance of strong rise in regional demand in coming weeks and pick-up in arbitrage shipments to overseas markets.· Lack of any such strong pick-up in regional and overseas demand could leave surplus supply lingering for longer..· Pick-up in shipments from Europe to southeast Asia during Q3 2025 helps to remove some supplies..· Any slowdown in such shipments could by contrast compound build-up of surplus supplies..· Europe’s Group II base oils supply likely to get support from firm margins and high prices relative to other regions.· Europe’s steady Group II supply volumes throughout most of H1 2025 reflect that dynamic.· Europe’s Group II base oils supply reverts to more typical level in June 2025 after surge in supply in May 2025..· Supply reverts to more typical level in June 2025 as rise in imports cushions dip in Netherlands’ base oils output.· Supply holds firm in Q2 2025 even as Netherlands’ share of supply falls to lowest in a year..· Stability of supply could boost attraction for blenders to use more Group II base oils.· Large import volumes highlight attraction of Europe as key outlet for Group II supplies from overseas markets.· High Europe Group II prices relative to other regions add to that attraction.· Those prices rise even more relative to other regions so far in Q3 2025, especially for US supplies..· Dip in Netherlands’ output in June 2025 coincides with rise in Europe’s Group II base oils prices vs Group I prices, especially for heavy grades..· Stronger rise in Group II heavy-grade prices could reflect pick-up in demand.· Stronger rise in Group II heavy-grade prices could also point to drop in regional output having larger impact on heavy-grade supplies.· Still-elevated Group II N500 prices relative to Group I and relative to prices in other regions raise prospect of rise in supply and dip in demand for Group II heavy grades. .· Europe Group III base oils supply gets boost from ongoing pick-up in shipments from Spain..· Recovery in shipments from Middle East to Europe set to add to supply in coming weeks..US June base oil supply exceeds demand.UK’s June base oils output falls.Netherlands’ June base oils output falls.Americas/EMEA base oils demand outlook: Week of 8 September.Asia base oils supply outlook: Week of 8 September.Base Oil News stories and analysis also available on ICIS platform
