· US base oils demand could face more pressure from concern about growing disconnect between base oils prices and crude oil and feedstock prices.· Widening base oil premium to feedstock and diesel prices points to sudden improvement in demand and tightening supply.· Timing of surge in base oils premium suggests it is linked more to slump in crude oil prices than to marked change in supply-demand fundamentals.· Demand fundamentals instead show more signs of weakness than strength.· Concern that widening base oils premium to VGO reflects more the fall in crude oil prices than an improvement in fundamentals could raise expectations of subsequent adjustment in base oils premium.· The longer an adjustment takes to materialize, the larger the subsequent adjustment could be.· US base oils demand shows signs of staying unusually weak even before this month’s imposition of tariffs on most US imports.· US net base oils/lube exports rise to eleven-month high in Feb 2025 amid higher exports and slump in imports..· Steady US base oils prices in Q1 2025 point to demand at levels that cut impact of likely drop in domestic supply in Feb 2025..· US Group III base oils prices remain weak relative to Group II base oils and relative to feedstock VGO..· Prices remain weak even after slump in Group III base oils imports in Feb 2025, and with round of Group III plant maintenance work in North America, Middle East and Asia in Q2 2025.· Price weakness suggests supply remains sufficient even with recent drop in supply and prospect of more supply volatility over coming months.· Dynamic suggests demand remains at levels that balances out recent and any upcoming supply-volatility..· Latin America’s base oils demand shows signs of staying more muted even ahead of this month’s imposition of US tariffs on imports from the region.· US base oils exports to South America fall in Feb 2025 for fifth time in six months from year-earlier levels..· Exports fall despite lower base oils supply in South America early this year.· Drop in exports and lower regional supply raises prospect of increasingly tight availability unless weaker demand has cut requirements..· Europe’s base oils demand could turn more cautious in response to size of sudden surge in base oils premium to crude and gasoil prices.· Base oils values typically rise relative to feedstock and diesel prices in second quarter of the year in response to firmer supply-demand fundamentals.· Europe’s firmer supply-demand fundamentals in recent weeks mirror that seasonal trend.· Speed of rise in base oils margins in April 2025 instead likely reflects more the slump in crude oil prices than any marked change in fundamentals.· Concern about disconnect between supply-demand fundamentals and base oil margins could prompt buyers to limit any stock-build.· Signs of healthy supply of premium-grade base oils especially gives buyers more flexibility to procure supplies as and when required.· Demand for Group III base oils could get boost from unusually competitive price even after recent dip in Group II base oils prices.· Group III price stays at small premium, discount or parity vs Group II base oils since end-2024..· Extended period of near-price-parity could boost attraction for buyers to make more prolonged switch to using Group III base oils..· Europe domestic Group I brightstock price holds at multi-year high vs SN 500 and vs US export prices..· Sustained strength of brightstock price points to still strong supply-demand fundamentals.· Still-strong demand fundamentals, despite unusually high brightstock prices, point to limited alternative supply options..US’ February base oils exports rise.US’ Feb base oils exports to S America stay low.Asia base oils demand outlook: Week of 14 April.Global base oils arb outlook: Week of 14 April
