·        Crude oil prices stay rangebound at lower levels amid expectations of sufficient supply, muted demand as high interest rates keep pressure on economic activity in key global markets.

·        Diesel premium to crude stays close to six-month low, adding to signs of weaker demand.

·        Globally, lube blenders likely to hold back in anticipation of typical price-weakness at start of each year.

·        Firm base oils values versus crude/competing fuels could add to expectations of downward price pressure.

·        Base oils demand could revive earlier than usual as blenders’ lower inventories would prompt a faster response to any pick-up in finished lube demand.

·        Such a move would contrast with last year when blenders focused on cutting inventories in early 2023.

·        Blenders’ expectations that supply is readily available could curb urgency to replenish stocks and sustain strategy of maintaining low inventories.

·        Strategy leaves blenders more exposed to the possibility of tighter-than-expected supply/earlier-than-expected pick-up in demand.

·        Europe’s base oils demand likely to stay muted until blenders are comfortable that they no longer face the kind of downward price-pressure that the market often sees at the start of the new year.

·        Asia’s base oils demand likely to get support from stock replenishment ahead of seasonal pick-up in lube consumption later in Q1 2024.

·        Demand could get further support from signs of limited supply-build at end-2023 and subsequent expectations of more limited downward price-pressure.

·        China’s base oils demand shows signs of improving even if plentiful supply allows blenders to maintain lower stocks.

·        US domestic base oils demand could stay muted as firm prices and seasonal slowdown in consumption incentivize buyers to hold off.

·        Overseas demand for US export cargoes likely to get support from more competitive prices.

·        Latin America’s demand from US base oils supplies could face pressure from slowdown in structural requirements in markets like Brazil and Mexico, and from weaker lube consumption in Argentina.