· US base oils prices weaken versus competing fuel/feedstock prices, incentivizing refiners to cut production.· US domestic price premium to export prices stays wide, cushioning impact of weak export prices and curbing pressure on refiners to cut production.· Trend could prolong persistent availability of surplus supplies.· US faces light round of scheduled plant maintenance work in early 2024, especially vs same time a year earlier.· Lack of scheduled maintenance work leaves market facing more supply than year-earlier levels unless refiners take moves to adjust production..· Surplus of US’ December base oils exports over imports stays wider than usual..· Surplus stays wide as ongoing wave of US exports at year-end cushions impact of surge in Group III imports from Asia.· Trend raises prospect of leaving US market with balanced-to-tighter supply of Group II base oils and growing surplus of Group III base oils at year-end.· Narrowing gap between US Group II and Group III prices in Q4 2023 reflects that dynamic.· US’ Group III base oils prices maintain steep premium to Europe prices early this year.· Firm prices incentivize Mideast Gulf/Asia refiners to continue to target US market with more Group III base oils.· US set to see slowdown in arrival of Group III shipments from South Korea, rise in arrival of shipments from Mideast Gulf in March 2024.· Americas’ November base oils supply holds steady from Oct 2023, contrasts with slump in region’s demand.· Trend highlights need for US to boost base oils exports, which duly materialized, slowing supply-build..· Europe’s sliding Group I base oils values versus competing fuel/feedstock prices could incentivize refiners to cut production.· Price weakness coincides with prospect of permanent closure of Group I plant in Italy in coming months.· Additional uncertainty about supply of Group I base oils adds to incentive for blenders to maximise consumption of other grades instead.· Signs of pick-up in flows from Saudi Arabia to Europe coincide with slowdown in shipments via Red Sea.· Prospect of tighter Group I supply in Europe could boost attraction of more regular flows of Group I base oils from Saudi Arabia to Europe.· Europe’s Group II base oils supply could tighten because of scheduled plant maintenance work in the region in Q1 2024.· Surge in US exports to Europe in Nov and Dec 2023 likely to dampen impact of drop in region’s Group II output in Q1 2024..· Steep and still-widening premium of Europe Group II prices over US export prices incentivizes US refiners to maintain high exports to the region.· Several large cargoes from US scheduled to reach Europe in 2H Feb and early March 2024..· Europe’s Group III base oils supply likely to get support from pick-up in flows from Spain.· Shipments of premium-grade supplies from Spain revive in Dec 2023 and Jan 2024 after slowdown during previous two months..· Turkey’s December Group I base oils imports slump from year-earlier levels amid tighter supply in Europe.· Trend of tighter Europe supply could extend through this year if Group I plant in Italy closes.· Turkey’s December Group I imports from Russia rebound amid increasingly competitive prices vs Europe supplies..· Firmer prices and prospect of tighter supply in Europe could further boost Turkey’s demand for Russian supplies in 2024.· Trend would increase Turkey’s importance as key outlet for Russian supplies, especially if they face slowdown in flows to Mideast Gulf because of Red Sea-related disruptions..· Egypt set to take delivery of shipments from Saudi Arabia and US in 2H Feb 2024 – in addition to more regular monthly flows from Europe..Americas/EMEA base oils - week of Feb 19: Demand outlook.Asia base oils - week of Feb 19: Supply outlook.Global base oils - week of Feb 19: Price outlook - margins.Global base oils - week of Feb 19: Price outlook - arbitrage.Global base oils – week of Feb 19: Cargo flows
· US base oils prices weaken versus competing fuel/feedstock prices, incentivizing refiners to cut production.· US domestic price premium to export prices stays wide, cushioning impact of weak export prices and curbing pressure on refiners to cut production.· Trend could prolong persistent availability of surplus supplies.· US faces light round of scheduled plant maintenance work in early 2024, especially vs same time a year earlier.· Lack of scheduled maintenance work leaves market facing more supply than year-earlier levels unless refiners take moves to adjust production..· Surplus of US’ December base oils exports over imports stays wider than usual..· Surplus stays wide as ongoing wave of US exports at year-end cushions impact of surge in Group III imports from Asia.· Trend raises prospect of leaving US market with balanced-to-tighter supply of Group II base oils and growing surplus of Group III base oils at year-end.· Narrowing gap between US Group II and Group III prices in Q4 2023 reflects that dynamic.· US’ Group III base oils prices maintain steep premium to Europe prices early this year.· Firm prices incentivize Mideast Gulf/Asia refiners to continue to target US market with more Group III base oils.· US set to see slowdown in arrival of Group III shipments from South Korea, rise in arrival of shipments from Mideast Gulf in March 2024.· Americas’ November base oils supply holds steady from Oct 2023, contrasts with slump in region’s demand.· Trend highlights need for US to boost base oils exports, which duly materialized, slowing supply-build..· Europe’s sliding Group I base oils values versus competing fuel/feedstock prices could incentivize refiners to cut production.· Price weakness coincides with prospect of permanent closure of Group I plant in Italy in coming months.· Additional uncertainty about supply of Group I base oils adds to incentive for blenders to maximise consumption of other grades instead.· Signs of pick-up in flows from Saudi Arabia to Europe coincide with slowdown in shipments via Red Sea.· Prospect of tighter Group I supply in Europe could boost attraction of more regular flows of Group I base oils from Saudi Arabia to Europe.· Europe’s Group II base oils supply could tighten because of scheduled plant maintenance work in the region in Q1 2024.· Surge in US exports to Europe in Nov and Dec 2023 likely to dampen impact of drop in region’s Group II output in Q1 2024..· Steep and still-widening premium of Europe Group II prices over US export prices incentivizes US refiners to maintain high exports to the region.· Several large cargoes from US scheduled to reach Europe in 2H Feb and early March 2024..· Europe’s Group III base oils supply likely to get support from pick-up in flows from Spain.· Shipments of premium-grade supplies from Spain revive in Dec 2023 and Jan 2024 after slowdown during previous two months..· Turkey’s December Group I base oils imports slump from year-earlier levels amid tighter supply in Europe.· Trend of tighter Europe supply could extend through this year if Group I plant in Italy closes.· Turkey’s December Group I imports from Russia rebound amid increasingly competitive prices vs Europe supplies..· Firmer prices and prospect of tighter supply in Europe could further boost Turkey’s demand for Russian supplies in 2024.· Trend would increase Turkey’s importance as key outlet for Russian supplies, especially if they face slowdown in flows to Mideast Gulf because of Red Sea-related disruptions..· Egypt set to take delivery of shipments from Saudi Arabia and US in 2H Feb 2024 – in addition to more regular monthly flows from Europe..Americas/EMEA base oils - week of Feb 19: Demand outlook.Asia base oils - week of Feb 19: Supply outlook.Global base oils - week of Feb 19: Price outlook - margins.Global base oils - week of Feb 19: Price outlook - arbitrage.Global base oils – week of Feb 19: Cargo flows