Singapore’s Base Oils Exports Improve In Month To 17 June

• Singapore's four-week base oils exports rebounded from a six-year low, signalling that May may have marked the trough in the city-state’s shipments

• Exports to China and Southeast Asia recovered, but shipments to India fell to their lowest since January 2024, pointing to continued procurement caution

• Improving supply coincided with falling crude oil prices and seasonal demand weakness, raising the prospect that market tightness could unwind faster than expected

Singapore's four-week base oils exports recovered from a six-year low, pointing to improving Asian supply just as weaker demand and lower oil prices began to ease market tightness.

Four-week exports rose above 110,000 tonnes in the period to 17 June, after falling below 100,000 tonnes the prior week for the first time in six years, Enterprise Singapore data showed.

Weekly shipments rebounded to close to 50,000 tonnes, the highest since end-April.

The recovery in exports coincided with falling crude oil prices, expectations of improving supply and a seasonal slowdown in lubricants demand.

The combination pointed to tightening conditions beginning to reverse after several months in which buyers built stocks to protect against shortages.

Key Highlights

·         Domestic exports accounted for 86% of total exports, the highest share in more than three months and up from around 80% in the prior two months, pointing to a recovery in domestic output.

·         Four-week exports to China and Southeast Asia recovered, while shipments to India fell to their lowest level since January 2024, pointing to continued softness in one of Singapore's largest markets.

·         Four-week imports held firm despite lower weekly inflows, sustained by the arrival of more European cargoes, adding to a wave of shipments from that market in May.

Market Repercussions

An extension of Singapore's export recovery would point to May as the bottom of the disruption-driven slump.

Any sustained recovery would add to signs that Asian supply remained more resilient than expected despite the disruptions and the surge in forward buying.

Expectations of improving availability and lower prices reduced the urgency that had driven earlier stock-building, with a seasonal slowdown in demand compounding the shift.

Recovering supply and softening demand were now pointing in the same direction. The tightening cycle was reversing.