· Crude oil prices hold close to highest this year amid expectations supply will tighten more than any slowdown in demand.· Crude oil prices likely to hold firm or trend higher as supply tightens over coming months.· Diesel prices stay high relative to crude even as they slips from recent highs.· Higher fuel prices raise prospect of global interest rates staying higher for longer to curb any pick-up in inflation.· Prospect of interest rates staying higher for longer would increase likelihood of or extend slowdown in economic growth in US and Europe and further curb fuel demand.· Increasingly weak base oils prices relative to feedstock prices increase likelihood of higher rather than lower prices.· Expectations that base oils prices will hold firm or rise curb blenders’ concern about exposure to lower prices, supporting firmer demand.· Base oils demand faced pressure in 1H 2023 from weak lube consumption and blenders’ moves to cut stocks.· Blenders’ low stocks mean that factor set to have less impact on demand over coming months.· China’s slower-than-expected economic recovery adds to pressure on economic growth in rest of Asia.· Regional blenders in Asia likely to continue to procure supplies on need-to basis as hedge against weaker-than-expected demand.· Germany’s economy faces sustained pressure from sustained slowdown in industrial activity, weak overseas demand and high interest rates.· Slowdown in Europe’s largest economy raises prospect of domestic and regional blenders managing carefully any moves to replenish stocks to meet seasonal pick-up in lube demand over coming weeks.· US interest rates expected to stay high well into 2024 amid signs of still-firm economic growth.· Peak Atlantic hurricane-season period over coming weeks increases risk of base oils supply disruptions, increases incentive for blenders to hold sufficient stocks to cover against any such disruptions..Global base oils - week of Sep 11: Price outlook - arbitrage
· Crude oil prices hold close to highest this year amid expectations supply will tighten more than any slowdown in demand.· Crude oil prices likely to hold firm or trend higher as supply tightens over coming months.· Diesel prices stay high relative to crude even as they slips from recent highs.· Higher fuel prices raise prospect of global interest rates staying higher for longer to curb any pick-up in inflation.· Prospect of interest rates staying higher for longer would increase likelihood of or extend slowdown in economic growth in US and Europe and further curb fuel demand.· Increasingly weak base oils prices relative to feedstock prices increase likelihood of higher rather than lower prices.· Expectations that base oils prices will hold firm or rise curb blenders’ concern about exposure to lower prices, supporting firmer demand.· Base oils demand faced pressure in 1H 2023 from weak lube consumption and blenders’ moves to cut stocks.· Blenders’ low stocks mean that factor set to have less impact on demand over coming months.· China’s slower-than-expected economic recovery adds to pressure on economic growth in rest of Asia.· Regional blenders in Asia likely to continue to procure supplies on need-to basis as hedge against weaker-than-expected demand.· Germany’s economy faces sustained pressure from sustained slowdown in industrial activity, weak overseas demand and high interest rates.· Slowdown in Europe’s largest economy raises prospect of domestic and regional blenders managing carefully any moves to replenish stocks to meet seasonal pick-up in lube demand over coming weeks.· US interest rates expected to stay high well into 2024 amid signs of still-firm economic growth.· Peak Atlantic hurricane-season period over coming weeks increases risk of base oils supply disruptions, increases incentive for blenders to hold sufficient stocks to cover against any such disruptions..Global base oils - week of Sep 11: Price outlook - arbitrage
