· US’ weekly gasoline demand falls in 1H August for first time since March 2023..· US blenders’ urgency to replenish stocks could ease after domestic refiners raised posted prices in 1H Aug in response to higher feedstock costs and diesel prices.· Prospect of tighter base oils supply-demand fundamentals in coming weeks could support additional price adjustments.· Such expectations could sustain firmer demand.· Structural demand in Latin America for US supplies likely to hold firm amid tight availability in Europe, lack of arbitrage flows from Asia.· Prospect of sustained demand for US supplies partly depends on prices staying competitive.· Such a scenario partly depends on US refiners’ strategies – whether to adjust export prices higher in response to higher posted prices, or to prioritise removal of surplus supplies..· Sustained wave of US shipments to Argentina in 1H 2023 highlights open arbitrage to Latin America..· Arbitrage shipments help to clear surplus supplies from US market, contrast with dearth of such cargoes last year.· Competitive US prices sustain arbitrage, limit arbitrage opportunities from Asia.· Price trends and impact on arb flows also mark significant difference from same time last year..· Brazil’s balanced supply-demand fundamentals likely to support firm demand for US shipments in coming months amid scant surplus and as plant maintenance work cuts domestic supply..· Europe’s auto sales show sustained strong growth in region’s largest markets, especially for alternative-fuel vehicles..· Europe’s lube demand shows growing divergence between different regions, likely to get boost in coming weeks following summer lull..· Spain’s June lube consumption rises for first time in three months, reflecting the divergence in demand trends throughout Europe..· Spain’s firmer lube demand mirrors pick-up in consumption in Italy and Portugal, contrasts with weaker consumption in northern Europe.· Firmer lube demand in Mediterranean region boosts need for blenders in those markets to replenish lubricants and feedstock supplies more rapidly, incentivizes them to hold larger stocks.· Signs of firm demand in key African markets provide valuable outlets for shipments from Europe, curbing any significant supply-build and maintaining regional supply-demand balance..Global base oils - week of Aug 21: Price outlook - margins
· US’ weekly gasoline demand falls in 1H August for first time since March 2023..· US blenders’ urgency to replenish stocks could ease after domestic refiners raised posted prices in 1H Aug in response to higher feedstock costs and diesel prices.· Prospect of tighter base oils supply-demand fundamentals in coming weeks could support additional price adjustments.· Such expectations could sustain firmer demand.· Structural demand in Latin America for US supplies likely to hold firm amid tight availability in Europe, lack of arbitrage flows from Asia.· Prospect of sustained demand for US supplies partly depends on prices staying competitive.· Such a scenario partly depends on US refiners’ strategies – whether to adjust export prices higher in response to higher posted prices, or to prioritise removal of surplus supplies..· Sustained wave of US shipments to Argentina in 1H 2023 highlights open arbitrage to Latin America..· Arbitrage shipments help to clear surplus supplies from US market, contrast with dearth of such cargoes last year.· Competitive US prices sustain arbitrage, limit arbitrage opportunities from Asia.· Price trends and impact on arb flows also mark significant difference from same time last year..· Brazil’s balanced supply-demand fundamentals likely to support firm demand for US shipments in coming months amid scant surplus and as plant maintenance work cuts domestic supply..· Europe’s auto sales show sustained strong growth in region’s largest markets, especially for alternative-fuel vehicles..· Europe’s lube demand shows growing divergence between different regions, likely to get boost in coming weeks following summer lull..· Spain’s June lube consumption rises for first time in three months, reflecting the divergence in demand trends throughout Europe..· Spain’s firmer lube demand mirrors pick-up in consumption in Italy and Portugal, contrasts with weaker consumption in northern Europe.· Firmer lube demand in Mediterranean region boosts need for blenders in those markets to replenish lubricants and feedstock supplies more rapidly, incentivizes them to hold larger stocks.· Signs of firm demand in key African markets provide valuable outlets for shipments from Europe, curbing any significant supply-build and maintaining regional supply-demand balance..Global base oils - week of Aug 21: Price outlook - margins