· Crude oil prices rise above narrow $72-77/bl range they held in since early May as Saudi Arabia and Russia signal moves to cut oil supply.· Slower jobs growth in US in June raise expectations that a likely further rise in US interest rates in July could be the last.· Expectations that interest rates are close to peaking could put further pressure on US dollar, adding to support for firmer crude oil prices.· Any sustained rise in crude oil prices would continue to face resistance from concern about lower demand as high interest rates curb global economic activity.· Any pick-up in expectations that crude oil prices have bottomed out/ started to trend higher would provide underlying support for base oils prices.· Europe likely to see several more interest-rate increases in coming months even as inflationary pressures start to ease and weak growth extends to services sector.· China’s industry and consumer inflation stays weaker than expected in June, highlighting faltering recovery in manufacturing and consumer activity.· Excluding China, economic slowdown in Asia shows signs of bottoming out.· High interest rates increase cost of holding large inventories, incentivize blenders to minimize stocks and procure on an as-needed basis.· Signs of plentiful base oils availability add to incentive for blenders to procure on a need-to basis.· Signs of plentiful base oils availability likely to delay price-impact of any rise in crude oil and feedstock prices.· Preference to minimize inventories leaves market exposed to unexpected supply disruptions.· Preference to minimize inventories leaves markets exposed to the prospect of a sustained rise in demand if and when there is growing incentive to hold larger inventories..Global base oils - week of July 10: Price outlook - arbitrage
· Crude oil prices rise above narrow $72-77/bl range they held in since early May as Saudi Arabia and Russia signal moves to cut oil supply.· Slower jobs growth in US in June raise expectations that a likely further rise in US interest rates in July could be the last.· Expectations that interest rates are close to peaking could put further pressure on US dollar, adding to support for firmer crude oil prices.· Any sustained rise in crude oil prices would continue to face resistance from concern about lower demand as high interest rates curb global economic activity.· Any pick-up in expectations that crude oil prices have bottomed out/ started to trend higher would provide underlying support for base oils prices.· Europe likely to see several more interest-rate increases in coming months even as inflationary pressures start to ease and weak growth extends to services sector.· China’s industry and consumer inflation stays weaker than expected in June, highlighting faltering recovery in manufacturing and consumer activity.· Excluding China, economic slowdown in Asia shows signs of bottoming out.· High interest rates increase cost of holding large inventories, incentivize blenders to minimize stocks and procure on an as-needed basis.· Signs of plentiful base oils availability add to incentive for blenders to procure on a need-to basis.· Signs of plentiful base oils availability likely to delay price-impact of any rise in crude oil and feedstock prices.· Preference to minimize inventories leaves market exposed to unexpected supply disruptions.· Preference to minimize inventories leaves markets exposed to the prospect of a sustained rise in demand if and when there is growing incentive to hold larger inventories..Global base oils - week of July 10: Price outlook - arbitrage
