Global base oils demand outlook: Week of March 11

·        Crude oil prices stay in narrow range as prospect of tighter-than-expected crude oil supply in Q2 2024 counters impact of weak economic growth.

·        Diesel price premium to crude oil stays in range it has mostly held in since start of Q4 2023.

·        Global base oils demand faces prospect of seasonal boost in coming weeks, especially in Asia.

·        Lube demand often peaks in markets like Thailand, India and Japan in the month of March.

·        China’s base oils demand holds steady for now, with signs appearing of more-than-sufficient supply to meet requirements.

·        Demand in southeast Asia shows signs of holding firm.

·        India’s base oils demand could be more muted as prospect of slowdown in lube consumption at start of Q2 2024 adds to incentive to manage stocks carefully.

·        Europe’s export price discount to domestic prices narrows sharply, pointing to firmer supply-demand fundamentals.

·        Relative lack of stock-building by blenders ahead of spring oil-change season reflects concern about ongoing demand weakness, expectations of sufficient supplies, and preference to maintain low inventories.

·        Lack of stock-building leaves buyers more exposed to risk of firmer-than-expected demand or lower-than-expected supply.

·        US buyers face incentive to procure smaller volumes more frequently to cover seasonal pick-up in demand.

·        Strategy takes advantage of healthy availability of supply, limits exposure to possibility of slower-than-expected demand, and keeps stocks lean.

·        Competitive US export prices likely to sustain steady buying interest in overseas markets like Latin America, even if buyers require smaller volumes.