Global base oils - week of May 29: Demand outlook

·        Crude oil prices continue to edge higher after bottoming out in early May, but stay below $80-86/bl range from Dec ’22 to March ’23.

·        Crude oil prices struggle to return to Dec-March levels as concern of slower economic growth outweighs prospect of tighter supply.

·        Expectation that any rise in crude oil prices will be limited and slow curbs blenders’ concern about feedstock price pressures.

·        Plentiful base oils availability globally gives blenders the flexibility to hold lower stocks.

·        Signs of weaker lube demand and high interest rates add to attraction of holding lower stocks.

·        Lower lube demand as economic growth slows likely to compound typical seasonal slowdown in lube demand in third quarter of the year.

·        Blenders’ switch to maintaining lower stocks and procuring smaller volumes likely to boost frequency of procurement, supporting steadier future demand.

·        Change in procurement patterns could boost attraction for refiners to offer option of procuring smaller volumes such as flexibag shipments.