Americas/EMEA base oils -week of July 3: Demand outlook

·        US gasoline demand rises in 2H June for fourteenth week.

·        US blenders show signs of preference to hold lower stocks in coming weeks as prospect of seasonal slowdown counters concern about weather-related disruptions.

·        Demand for US base oils could get more sustained support from Latin America and Africa as competitive prices attract buyers, keep arbitrage shut from sources like Asia.

·        More workable arbitrage for US base oils supplies could cushion likely slowdown in lube consumption in Latin America.

·        Latin America’s May automobile sales fall year on year for first time in thirteen months, adding to signs of regionwide slowdown in economic activity.

·        Slowdown in economic activity contrasts with firmer-than-expected lube demand in Brazil and Argentina in May.

·        Trend could reflect artificial rise in spending in response to high inflation.

·        Global base oils exports to Nigeria rise to thirteen-month high in April as buyers lock in surplus supplies from US and Europe.

·        Nigerian buyers will likely need to rely more on supplies from US over coming months in face of tighter spot availability of Group I base oils in Europe.

·        Prospect of tighter supplies from Europe for Nigeria also likely to boost interest in any shipments of Russian origin.

·        Italy’s May lube demand falls for eighth time in nine months as sliding automobile oils consumption outweighs firmer industrial oils demand.

·        Trend contrasts with the past year, when automobile oils demand mostly rose and industrial oils demand fell.

·        Trend during that time reflected relative strength of services sector and weakness of manufacturing sector.

·        Latest trend suggests strength of services sector may be waning.

·        Any extension of that trend to other markets in Europe could compound slowdown in lube demand over past year.