· US base oils demand could stay cautious amid signs of sufficient supplies to cover domestic requirements.· Expectations of sufficient supply and seasonal slowdown in demand give buyers more leverage to hold back in face of recent volatility of crude oil prices and base oils margins.· Buyers face challenge of balancing prospect of slowdown in demand in Q3 2025 with risk of weather-related supply disruptions.· This year’s Atlantic hurricane season begins more slowly than last year, when a major hurricane already struck the US Gulf coast around this time a year ago. · Overseas demand for US supplies could ease as retracement of crude oil prices curbs concern about upward pressure on base oils prices.· Seasonal slowdown in demand and expectations of rising surplus supplies in US and in other markets add to incentive to hold back for now..· Latin America’s base oils demand could ease amid signs of more extended slowdown in region’s consumption.· Brazil’s lube consumption falls in May 2025 for third straight month from year-earlier levels..· Weaker lube demand likely to incentivize blenders to maintain lower stocks.· Recent crude oil price-volatility and expectations of sufficient availability of base oils supplies in domestic and overseas markets add to attraction of maintaining lower stocks.· Any such dynamic could complicate overseas base oils suppliers’ moves to clear a pick-up in surplus volumes in markets like Latin America.· Any such dynamic could prompt surplus volumes in overseas markets to target other outlets instead such as Africa or India..· Demand in Latin America shows pockets of strength in markets like Chile, whose base oils imports extend strong rise in May 2025..· Firm demand in Chile coincides with rise in the country’s economic activity in April 2025 for the ninth time in ten months..· Europe’s base oils demand could slow as blenders focus on trimming stocks ahead of typical summer-lull that is likely to start in the coming weeks.· Ongoing drop in lube consumption from year-earlier levels could compound size of seasonal fall in demand.· Italy’s lube consumption falls in May 2025 for first time in three months, reflecting that trend..· Buyers’ lower stocks would expose them to risk of higher prices in response to any unexpected rebound in feedstock prices or disruption to supply.· Expectations of improvement in availability of supply of all base oils grades likely to outweigh those concerns and add to attraction of maintaining lower stocks..· Europe’s Group II heavy-grade price-premium to Group I heavy neutrals extends rise to highest in more than two years..· Sustained strength of Group II heavy-grade price-premium through most of May-June 2025 points to firmer supply-demand fundamentals for the grade.· Price-premium could face pressure from any slowdown in outright demand or rise in supplies of Group I or Group II base oils..· Base oils demand in Middle East for supplies from other regions could get support to cover for any disruption to shipments from Iran.· Prospect of any such disruptions eases following ceasefire between Israel and Iran.· Demand could anyway hold steady after global exports to Middle East stay lower so far this year compared with last year..· Lack of any sustained wave of base oils exports to Middle East so far this year avoids kind of stock-build the market faced in H1 2024.· Lower stocks likely to support more regular procurement.· Dynamic makes region a key market for any pick-up in surplus supplies in Asia and US over coming months.· Any supply-disruptions in Middle East, and subsequent pick-up in demand for additional Group II base oils as alternative, would facilitate such arbitrage shipments. · Gap between ex-tank Sharjah Group I SN 500 and CFR UAE Group II heavy-grade prices narrows sharply in June 2025, adding to feasibility of such shipments..· Any reversal of that price-gap would put onus back on adjustment in FOB Group II heavy-grade prices in source markets to make arbitrage workable..Global base oils margins outlook: Week of 30 June.Global base oils arb outlook: Week of 30 June.Asia base oils demand outlook: Week of 30 June.Brazil’s May lube demand extends fall.Italy’s May lube demand falls.Global base oils exports to Middle East rise in May
