·        Global base oils values mostly stay high relative to feedstock/competing fuel prices even with recent drop in price differentials.

·        Firm margins suggest supply-demand fundamentals stay tight, incentivize refiners to maintain high output levels.

·        Any disconnect between actual supply-demand fundamentals and price signals pointing to firm fundamentals could compound any mismatch between supply and demand.

·        FOB Asia Group I/II light/heavy-grade base oils premium to Singapore gasoil price stays elevated even as it extends drop since mid-Sept 2024.

·        FOB NE Asia Group I/II heavy-grade premium to gasoil holds close to highest since Q4 2021.

·        FOB Asia light-grade base oils values also stay firm even as they increasingly lag strength of heavy grades.

·        Firm light and especially heavy-grade values point to tight supply-demand fundamentals, incentivize refiners to maximise base oils output.

·        China’s domestic Group II N150 premium to domestic diesel prices extends rise to highest in more than a year.

·        China’s domestic Group II heavy-neutrals and Group I light/heavy neutrals prices also extend strong rise vs diesel.

·        Sustained rise in price margins points to tight supply-demand fundamentals, incentivizing domestic refiners to boost output.

·        Domestic Group I refiners will have difficulty to respond accordingly because of upcoming closure of major Group I unit in the country in Oct 2024.

·        CFR India N70 premium to Singapore gasoil price extends fall to lowest in more than two months.

·        Premium stays at level that keeps arbitrage to India feasible and incentivizes refiners to direct very-light grades into base oils rather than diesel pool.

·        Europe’s domestic Group I price premium to VGO falls sharply, contrasting with steadier Group II/III premium to VGO.

·        Any extension of that trend could point to structural change in supply-demand fundamentals for Group I and premium-grade base oils.

·        Europe Group II light-grade premium to VGO further outpaces equivalent US Group II premium, adding to signs of relative strength of Europe Group II prices.

·        US Group II export light-grade price premium to VGO extends fall to lowest in more than two months.

·        Premium stays unusually high vs typical levels, especially in view of weakness of diesel premium to crude.

·        Firm price levels sustain incentive for refiners to produce more light grades, provide refiners with more room to adjust prices and still maintain firm margins.