· US domestic base oils demand likely to hold steady as buyers balance out concern about weather-related supply disruptions with prospect of seasonal slowdown in demand during summer months.· Moves to build stocks as buffer against supply-related disruptions contrasts with blenders’ more recent strategy of maintaining lower stocks.· Moves to build stocks brings forward future demand, boosting current demand.· Moves to build stocks would cushion supply and demand impact of any supply disruptions.· Moves to build stocks would leave blenders with surplus volumes to consume if there are no supply disruptions.· Any such scenario could repeat similar trend in H1 2023, when blenders’ existing stocks covered seasonal pick-up in demand.· Signs of balanced supply-demand fundamentals for now and firmer crude oil/heating oil prices curb prospect of price-cuts.· Expectations of steady-to-firm prices likely to provide additional support to demand.· Overseas demand for US supplies could ease as higher US prices make arbitrage less feasible or unfeasible to outlets like Europe and India.· Americas' demand could instead increase for supplies from Asia as higher US export prices widen their premium to Group II cargo prices in Asia. .· Latin America’s April lube demand climbs to eight-month high, and unusually rises from month of March..· Region’s unexpectedly firm lube demand sustains its requirements for additional base oils supplies from overseas markets.· Including US base oils exports to Latin America, region’s smaller base oils supply surplus over demand in March 2024 and April 2024 likely to support steady demand for overseas supplies..· Latin America's buyers likely to continue to prioritize base oils shipments from US even after rise in US export prices in Q2 2024.· Brazil’s lube demand shows signs of holding firm in May 2024 despite disruption caused by floods in Rio Grande do Sul..· Europe's tighter Group I supply could impact typical seasonal slowdown in demand for the grade in the months of July and August.· Tighter Group I supply curbs prospect of any build-up of surplus volumes during those months.· Europe’s tight Group I supply and firm prices relative to Group II/III base oils boost incentive for blenders to use more premium-grade supplies.· Strength of Group I prices relative to other grades suggest demand for Group I base oils remains firm even with higher prices.· Recovery in Europe’s lube demand shows signs of ongoing volatility, deterring blenders from building larger stocks.· Seasonal pick-up in Europe’s lube demand this year moves to month of April instead of March..· Delayed pick-up in demand could reflect blenders’ and end-users’ focus on maintaining low stocks amid uncertainty about outlook.· Delayed pick-up in demand cushions impact of tighter Group II supply in Q1 2024.· Delayed pick-up in demand magnifies impact of tighter Group I supply in Q2 2024.· Strength of pick-up in demand at start of Q2 2024, and blenders' low inventories, could trigger moves to replenish base oils and lubricants stocks..· Key markets in Africa face ongoing reliance on Europe for most of their base oils supplies as shipments from other sources stay more sporadic.· Global base oils exports to key markets in Africa recover to three-month high in April 2024 on pick-up in flows from US and Saudi Arabia..· Irregular flows from both those sources contrast with steady volumes from Europe.· Europe’s tightening base oils production capacity raises prospect of making flows from that market more volatile too..· South Korea’s May base oils exports to UAE fall to four-month low..· Exports slow as Middle East market first absorbs surge in global shipments to the region in Q1 2024.· Global exports to Middle East stay relatively high in April 2024 even as they fall from previous two months..· Firm exports likely to sustain plentiful supplies in the region for longer, pushing back the timing of any moves to replenish stocks. · CFR UAE Group II base oils premium to FOB NE Asia prices widens in May and June 2024.· Wider premium makes arbitrage more feasible, could point to moves to target supplies for delivery later in Q3 2024.· Any extended pick-up in flows from Saudi Arabia to the UAE could limit any revival in demand for supplies from Asia..Asia base oils demand outlook: Week of 24 June.Global base oils margins outlook: Week of 24 June.Global base oils arb outlook: Week of 24 June
· US domestic base oils demand likely to hold steady as buyers balance out concern about weather-related supply disruptions with prospect of seasonal slowdown in demand during summer months.· Moves to build stocks as buffer against supply-related disruptions contrasts with blenders’ more recent strategy of maintaining lower stocks.· Moves to build stocks brings forward future demand, boosting current demand.· Moves to build stocks would cushion supply and demand impact of any supply disruptions.· Moves to build stocks would leave blenders with surplus volumes to consume if there are no supply disruptions.· Any such scenario could repeat similar trend in H1 2023, when blenders’ existing stocks covered seasonal pick-up in demand.· Signs of balanced supply-demand fundamentals for now and firmer crude oil/heating oil prices curb prospect of price-cuts.· Expectations of steady-to-firm prices likely to provide additional support to demand.· Overseas demand for US supplies could ease as higher US prices make arbitrage less feasible or unfeasible to outlets like Europe and India.· Americas' demand could instead increase for supplies from Asia as higher US export prices widen their premium to Group II cargo prices in Asia. .· Latin America’s April lube demand climbs to eight-month high, and unusually rises from month of March..· Region’s unexpectedly firm lube demand sustains its requirements for additional base oils supplies from overseas markets.· Including US base oils exports to Latin America, region’s smaller base oils supply surplus over demand in March 2024 and April 2024 likely to support steady demand for overseas supplies..· Latin America's buyers likely to continue to prioritize base oils shipments from US even after rise in US export prices in Q2 2024.· Brazil’s lube demand shows signs of holding firm in May 2024 despite disruption caused by floods in Rio Grande do Sul..· Europe's tighter Group I supply could impact typical seasonal slowdown in demand for the grade in the months of July and August.· Tighter Group I supply curbs prospect of any build-up of surplus volumes during those months.· Europe’s tight Group I supply and firm prices relative to Group II/III base oils boost incentive for blenders to use more premium-grade supplies.· Strength of Group I prices relative to other grades suggest demand for Group I base oils remains firm even with higher prices.· Recovery in Europe’s lube demand shows signs of ongoing volatility, deterring blenders from building larger stocks.· Seasonal pick-up in Europe’s lube demand this year moves to month of April instead of March..· Delayed pick-up in demand could reflect blenders’ and end-users’ focus on maintaining low stocks amid uncertainty about outlook.· Delayed pick-up in demand cushions impact of tighter Group II supply in Q1 2024.· Delayed pick-up in demand magnifies impact of tighter Group I supply in Q2 2024.· Strength of pick-up in demand at start of Q2 2024, and blenders' low inventories, could trigger moves to replenish base oils and lubricants stocks..· Key markets in Africa face ongoing reliance on Europe for most of their base oils supplies as shipments from other sources stay more sporadic.· Global base oils exports to key markets in Africa recover to three-month high in April 2024 on pick-up in flows from US and Saudi Arabia..· Irregular flows from both those sources contrast with steady volumes from Europe.· Europe’s tightening base oils production capacity raises prospect of making flows from that market more volatile too..· South Korea’s May base oils exports to UAE fall to four-month low..· Exports slow as Middle East market first absorbs surge in global shipments to the region in Q1 2024.· Global exports to Middle East stay relatively high in April 2024 even as they fall from previous two months..· Firm exports likely to sustain plentiful supplies in the region for longer, pushing back the timing of any moves to replenish stocks. · CFR UAE Group II base oils premium to FOB NE Asia prices widens in May and June 2024.· Wider premium makes arbitrage more feasible, could point to moves to target supplies for delivery later in Q3 2024.· Any extended pick-up in flows from Saudi Arabia to the UAE could limit any revival in demand for supplies from Asia..Asia base oils demand outlook: Week of 24 June.Global base oils margins outlook: Week of 24 June.Global base oils arb outlook: Week of 24 June