· Crude oil prices stay in narrow range they have mostly held in since 2H Nov 2023.· Crude oil prices get upward support from concerns about supply disruptions, downward pressure from expectations of sufficient supply, weaker demand growth.· Diesel premium to crude oil holds steady in narrow range since 2H Nov 2023, stays well above typical levels before 2022.· Global base oils demand could stay lower in the short term until buyers are comfortable that prices have bottomed out.· Unusually wide gap between domestic and export prices in Europe and US markets sustain buyers’ expectations that price adjustments in recent weeks have yet to be completed.· Expectations of sufficient availability as and when required adds to buyers’ preference to hold off.· Blenders’ lower inventories, and concern about further drop in prices, incentivize procurement of smaller volumes to cover any immediate requirements.· Asia’s base oils demand likely to get support from expectations of strong pick-up in lube demand later in Q1 2024.· China’s firm base oils prices and lower exports point to ongoing round of stock-building ahead of lunar new year holidays.· Strength of China’s lube demand after lunar new year holidays would then determine sustainability of recent pick-up in base oils consumption.· India’s firmer base oils prices relative to other regions point to stronger demand to lock in supplies.· India’s buyers have incentive to secure more supplies from Asia and limit exposure to shipments from Saudi Arabia/Europe or US amid risk of delays.· Concern about logistical delays/disruptions could incentivize blenders to hold larger inventories.· Europe’s base oils demand likely to remain muted in short term until buyers are comfortable that prices have bottomed out.· European blenders’ base oils stocks are likely lower at start of 2024 than they were at start of 2023, raising the prospect of stronger round of stock-replenishment in coming weeks.· Domestic US prices stay high relative to export prices, incentivizing buyers to hold off.· Signs of slowdown in Latin America’s lube demand likely to compound slowdown in region’s base oils demand..Global base oils - week of Jan 22: Price outlook - margins.Global base oils - week of Jan 22: Price outlook - arbitrage
· Crude oil prices stay in narrow range they have mostly held in since 2H Nov 2023.· Crude oil prices get upward support from concerns about supply disruptions, downward pressure from expectations of sufficient supply, weaker demand growth.· Diesel premium to crude oil holds steady in narrow range since 2H Nov 2023, stays well above typical levels before 2022.· Global base oils demand could stay lower in the short term until buyers are comfortable that prices have bottomed out.· Unusually wide gap between domestic and export prices in Europe and US markets sustain buyers’ expectations that price adjustments in recent weeks have yet to be completed.· Expectations of sufficient availability as and when required adds to buyers’ preference to hold off.· Blenders’ lower inventories, and concern about further drop in prices, incentivize procurement of smaller volumes to cover any immediate requirements.· Asia’s base oils demand likely to get support from expectations of strong pick-up in lube demand later in Q1 2024.· China’s firm base oils prices and lower exports point to ongoing round of stock-building ahead of lunar new year holidays.· Strength of China’s lube demand after lunar new year holidays would then determine sustainability of recent pick-up in base oils consumption.· India’s firmer base oils prices relative to other regions point to stronger demand to lock in supplies.· India’s buyers have incentive to secure more supplies from Asia and limit exposure to shipments from Saudi Arabia/Europe or US amid risk of delays.· Concern about logistical delays/disruptions could incentivize blenders to hold larger inventories.· Europe’s base oils demand likely to remain muted in short term until buyers are comfortable that prices have bottomed out.· European blenders’ base oils stocks are likely lower at start of 2024 than they were at start of 2023, raising the prospect of stronger round of stock-replenishment in coming weeks.· Domestic US prices stay high relative to export prices, incentivizing buyers to hold off.· Signs of slowdown in Latin America’s lube demand likely to compound slowdown in region’s base oils demand..Global base oils - week of Jan 22: Price outlook - margins.Global base oils - week of Jan 22: Price outlook - arbitrage
