· US base oils demand likely to improve in coming weeks as blenders replenish stocks ahead of spring oil-change season.· Steady base oils prices, rangebound feedstock prices and manageable supply surplus curb risk of exposure to lower prices, providing further support.· Prospect of tighter base oils supply in coming weeks and concern about subsequent risk of exposure to higher prices could add to demand.· Expectations of sufficient supply and concern about impact of possible tariffs on economic activity incentivize buyers to hold sufficient inventories rather than build larger stocks.· Ongoing outperformance of US Group III base oils prices relative to other regions points to improvement in supply-demand fundamentals for the grade.· Signs of more limited surplus availability in Asia and Europe could boost overseas demand for US supplies in markets like Middle East and India..· Latin America’s base oils demand could get support from tighter-than-expected supply at end-2024, followed by delayed moves to replenish stocks early this year.· Supply tightens as Latin America’s lube demand rises in Dec 2024 for third month from year-earlier levels..· Rise in demand contrasts with fall in base oils supply, triggering supply shortfall..· Shortfall leaves blenders using up stocks faster, speeding up need to replenish inventories earlier.· Typical fall in US base oils export prices at start of new year, including in Q1 2024, incentivize buyers to hold off replenishing stocks at start of this year.· Dynamic squeezes into shorter time period blenders’ subsequent stock-replenishment moves in preparation for seasonal rise in demand at end-Q1 2025.· Signs of smaller-than-expected surplus volumes in US, and need for supplies for more prompt delivery, could trigger pick-up in competition among overseas buyers for US spot volumes..· Europe’s base oils demand also likely to get support from round of stock replenishment as blenders prepare for spring oil-change season.· Demand could get additional support from steady base oils prices and avoidance of large supply-build at end-2024 and early this year.· Weak finished lube demand incentivizes blenders to maintain low stocks and procure smaller volumes more frequently.· Demand for Group I brightstock could get additional support from concern about tight supply, boosting blenders’ urgency to lock in sufficient volumes.· Europe’s domestic brightstock price strengthens to widest premium to US brightstock since Sept 2024..· Widening premium and firm fundamentals boost attraction of moving more supplies from US to Europe rather than to other outlets like West Africa..· Middle East buyers are likely to seek additional volumes from markets like Saudi Arabia, Europe and US in response to slump in shipments from South Korea to the region in Jan 2025..· Slump in exports contrasts with wave of shipments from South Korea to UAE in Q1 2023 and Q1 2024.· Any pick-up in shipments from Saudi Arabia could be limited following a dip in that supplier’s exports in Jan 2025.· Signs of smaller-than-usual supply surplus in Europe and US early this year could curb opportunities to target additional shipments from those markets.· Low exports from US and Asia especially already slash total shipments to Middle East to six-month low in Dec 2024..· An extended slowdown in exports likely to prevent repeat of large supply-build in Middle East in H1 2024.· Avoidance of supply-build likely to support steadier demand.· Slump in exports and avoidance of supply-build curbs buyers’ leverage to target more competitive prices.· Less competitive prices add to attraction of procuring smaller volumes more frequently..Global base oils margins outlook: Week of 24 Feb.Global base oils arb outlook: Week of 24 Feb.Asia base oils demand outlook: Week of 24 Feb.Global base oils exports to Middle East stay low in January.Latam’s December lube demand rises
· US base oils demand likely to improve in coming weeks as blenders replenish stocks ahead of spring oil-change season.· Steady base oils prices, rangebound feedstock prices and manageable supply surplus curb risk of exposure to lower prices, providing further support.· Prospect of tighter base oils supply in coming weeks and concern about subsequent risk of exposure to higher prices could add to demand.· Expectations of sufficient supply and concern about impact of possible tariffs on economic activity incentivize buyers to hold sufficient inventories rather than build larger stocks.· Ongoing outperformance of US Group III base oils prices relative to other regions points to improvement in supply-demand fundamentals for the grade.· Signs of more limited surplus availability in Asia and Europe could boost overseas demand for US supplies in markets like Middle East and India..· Latin America’s base oils demand could get support from tighter-than-expected supply at end-2024, followed by delayed moves to replenish stocks early this year.· Supply tightens as Latin America’s lube demand rises in Dec 2024 for third month from year-earlier levels..· Rise in demand contrasts with fall in base oils supply, triggering supply shortfall..· Shortfall leaves blenders using up stocks faster, speeding up need to replenish inventories earlier.· Typical fall in US base oils export prices at start of new year, including in Q1 2024, incentivize buyers to hold off replenishing stocks at start of this year.· Dynamic squeezes into shorter time period blenders’ subsequent stock-replenishment moves in preparation for seasonal rise in demand at end-Q1 2025.· Signs of smaller-than-expected surplus volumes in US, and need for supplies for more prompt delivery, could trigger pick-up in competition among overseas buyers for US spot volumes..· Europe’s base oils demand also likely to get support from round of stock replenishment as blenders prepare for spring oil-change season.· Demand could get additional support from steady base oils prices and avoidance of large supply-build at end-2024 and early this year.· Weak finished lube demand incentivizes blenders to maintain low stocks and procure smaller volumes more frequently.· Demand for Group I brightstock could get additional support from concern about tight supply, boosting blenders’ urgency to lock in sufficient volumes.· Europe’s domestic brightstock price strengthens to widest premium to US brightstock since Sept 2024..· Widening premium and firm fundamentals boost attraction of moving more supplies from US to Europe rather than to other outlets like West Africa..· Middle East buyers are likely to seek additional volumes from markets like Saudi Arabia, Europe and US in response to slump in shipments from South Korea to the region in Jan 2025..· Slump in exports contrasts with wave of shipments from South Korea to UAE in Q1 2023 and Q1 2024.· Any pick-up in shipments from Saudi Arabia could be limited following a dip in that supplier’s exports in Jan 2025.· Signs of smaller-than-usual supply surplus in Europe and US early this year could curb opportunities to target additional shipments from those markets.· Low exports from US and Asia especially already slash total shipments to Middle East to six-month low in Dec 2024..· An extended slowdown in exports likely to prevent repeat of large supply-build in Middle East in H1 2024.· Avoidance of supply-build likely to support steadier demand.· Slump in exports and avoidance of supply-build curbs buyers’ leverage to target more competitive prices.· Less competitive prices add to attraction of procuring smaller volumes more frequently..Global base oils margins outlook: Week of 24 Feb.Global base oils arb outlook: Week of 24 Feb.Asia base oils demand outlook: Week of 24 Feb.Global base oils exports to Middle East stay low in January.Latam’s December lube demand rises
