· US base oils demand could ease in face of downward price-pressure and healthy availability of supply.· Buyers that built stocks as buffer against supply-disruptions during Atlantic hurricane season could start to tap those volumes before seeking additional supplies..· Demand could face more downward pressure if buyers are wary about exposure to further drop in prices.· Prices often face such pressure during final weeks of third quarter of the year..· Fall in prices at start of Sept 2025 repeats that trend.· Lower prices could prompt buyers to hold back until they are comfortable that prices have bottomed out.· Lower prices, and more rapid removal of surplus supplies, could conversely prompt demand to stabilize faster..· Flow of US exports needs to hold at elevated levels to help to slow pace of build-up of surplus supplies during summer months.· Any sign of slowdown in exports during that period would conversely raise concern about faster build-up of surplus supplies.· Some such signs of slowdown in exports during summer months start to appear.· US Group II heavy-grade prices maintain steep discount to CFR India prices so far in Q3 2025..· Steep US price-discount to CFR India price facilitates line-up of additional arbitrage shipments.· Steep US price-discount to CFR India prices points to persistent surplus volumes to clear.· US exports account for close to 60% of total US demand in June 2025 and 62% of demand in H1 2025..· Exports share stays elevated in June 2025 as rise in shipments to key outlets for spot supplies cushions impact of drop in shipments to key outlets for term supplies.· Exports would need to account for similarly-large or larger share of total demand during Q3 2025 to limit supply-build during summer months.· Smaller, more manageable supply-build could ease buyers’ concern about price-volatility, limiting any additional pressure on demand.· Larger supply-build could conversely increase those concerns about price-volatility.· Buyers could be wary about possibility of any weather-related supply disruptions in coming weeks, especially if these were to coincide with upcoming plant-maintenance work.· Tropical wave in Atlantic peters out in recent days, extending unusually quiet period in US Gulf coast region during Atlantic hurricane season.· Latin America’s base oils demand could be more muted, with buyers comfortable keeping stocks at lower levels even in face of steady finished lube consumption.· Expectations of rising surplus base oils supplies in overseas markets, and in turn downward pressure on prices, add to incentive to hold back for now.· Signs of pick-up in US shipments to Brazil and Argentina in recent weeks curb further any urgency to lock in additional supplies..· Europe’s regional base oils demand could be more muted as healthy availability of supply gives blenders flexibility to procure additional volumes as and when required.· Recent fall in base oils prices raises concern about exposure to further drop in prices, adding to attraction of maintaining lean stocks.· Europe’s Group I base oils demand could get boost from increasingly competitive prices vs premium-grade base oils..· Widening Group I price-discount to premium grades could conversely reflect more widespread consumption of Group II and Group III base oils instead of Group I..· Europe Group II light-grade prices also extend recovery vs Group II heavy grades and rise vs US light-grade prices..· Recent outperformance of Group II light grades versus Group I light grades and especially Group II heavy grades and US light-grade prices mirrors similar dynamic in Asia.· Outperformance of Group II light-grade prices points to firmer fundamentals for those supplies..· Lower outright Group I export prices could trigger pick-up in demand from overseas markets.· Europe Group I SN 500 export price flips to steepest discount to ex-tank UAE price since April 2024..· Sharp fall in Europe export price-differential reflects diverging fundamentals between the two regions, amid tighter Group I supply in Middle East.· Dynamic could facilitate pick-up in arbitrage shipments from Europe to UAE.· Time-lag between procurement, loading and delivery of any such shipments, combined with any signs of downward price-pressure in UAE market, could complicate any such moves..· Europe Group III base oils demand could turn more cautious amid signs of steady recovery in regional supply of the premium-grade base oils.· Tighter spot supply in recent months supported firmer Group III prices relative to Group I and Group II prices.· Improving Group III supply could erode that support for firmer prices.· Dynamic could prompt buyers to hold back in anticipation of such a scenario..US June base oil supply exceeds demand.Asia base oils demand outlook: Week of 8 September.Global base oils margins outlook: Week of 8 September.Global base oils arb outlook: Week of 8 September.Base Oil News stories and analysis also available on ICIS platform
