Global base oils - week of Aug 14: Demand outlook

·        Crude oil prices extend gains to highest since early 2023 in face of firmer demand and tightening supplies through 2H 2023.

·        Crude oil prices show signs of steadying after more-than 20pc surge since end-June; further price-gains could face more resistance.

·        Diesel price premium to crude oil extends rise to six-month high on concern about tight supplies.

·        IEA sees crude oil supply tightening sharply in 2H 2023.

·        Crude oil demand likely to face pressure from slow economic growth in Europe at least into 2024, myriad signs of China’s slower-than-expected economic recovery, and interest rates in US staying high at least into early 2024.

·        Outright global base oils prices lag surge in feedstock costs, raising prospect at least of adjustments to reflect higher costs.

·        Prospect of higher prices could spur firmer demand as buyers seek to lock in supplies before price increases.

·        Buyers would be replenishing stocks that they cut to lower-than-usual levels in 1H 2023.

·        Demand is set to get further support in coming weeks ahead of seasonal pick-up in consumption in September.

·        Demand is likely to get further boost if any supply disruptions materialize over coming weeks.

·        Demand is likely to get further support if supply turns out to be tighter than expected.

·        Atlantic hurricane season typically gets more active from late-August through October.