· Crude oil prices extend fall to lowest in almost four months.· Crude oil prices fall as concerns about economic slowdown in world’s largest markets outweigh impact of tighter supply in Q4 2023.· Diesel premium to crude oil extends fall to lowest since July 2023, reflecting concerns about economic growth prospects.· Falling crude oil prices coincide with and so compound seasonal slowdown in lube demand, provide additional reason for blenders to hold off procuring more supplies.· Lower feedstock prices raise concern about drop in base oils prices.· Base oils prices could face less downward pressure than usual in some markets because of more balanced fundamentals.· Even so, blenders likely to hold back until they are comfortable that base oils prices have completed any adjustments following recent change in feedstock costs.· Blenders’ preference to hold back could be stronger in US, whose supply surplus shows signs of being larger than in Europe and Asia.· US Group II heavy-grade prices weaken versus light-grade prices and versus prices in other regions, pointing to weaker domestic demand and moves to boost overseas demand.· Brazil’s base oils demand likely to hold firmer for longer as domestic plant maintenance cuts domestic supply in Q4, following sharp fall in supply at end-Q3 2023.· Buyers in Americas/Africa likely to need to line up shipments from suppliers closer to those regions amid signs of smaller supply-surplus in Asia.· Europe’s base oils demand faces seasonal slowdown, could fall less than expected in face more balanced supply-demand fundamentals.· India’s demand for very-light grades from Asia/Mideast Gulf could hold firm as US prices hold steady for now at premium to cfr India prices.· Trend could limit or delay flow of large volumes from US to India.· Lube demand in southeast Asia’s largest markets could hold firmer than expected after unusually strong rise in consumption at end-Q3 2023.· China’s base oils demand stays muted, keeping shut the arbitrage for Group II supplies from Asia.· Major lube blenders’ profit margins mostly rose in Q3 2023, while base oil refiners’ margins mostly fell.· Trend reflects impact of lower base oils prices and delayed/smaller fall in finished lube prices.· Trend highlights attraction of integrated base oils and lubricants operations, where strength in one segment tends to balance out weakness in the other..Global base oils - week of Nov 13: Price outlook - margins.Base Oil News stories and analysis also available on ICIS platform
