Global base oils demand outlook: Week of 15 July

·        Crude oil prices hold in narrow, higher range since rebounding in H1 June 2024, with pick-up in summer fuel consumption keeping crude supply tighter for now.

·        Diesel premium to crude edges lower, stays in narrow range at much lower levels than before mid-April 2024.

·        Lower diesel values versus crude curb attraction of producing more motor fuels, boost attraction of producing more base oils at current price levels.

·        Global base oils demand faces seasonal slowdown over coming weeks, followed by typical pick-up in consumption during final weeks of third quarter of the year.

·        Demand patterns likely to hold steady as firm crude prices and signs of relatively balanced supply-demand dynamics curb prospect of significant price volatility that would alter buying plans.

·        Asia’s base oils demand could start to revive in the coming weeks as buyers begin to eye supplies for loading in August and delivery in September.

·        Signs of smaller-than-usual supply surplus carried into Q3 2024 and firm crude prices could curb pressure on prices.

·        Prospect of more limited exposure to lower prices could incentivize buyers to maintain rather than hold off procurement plans.  

·        Demand for Asia supplies could get a boost from other markets where supply is tighter.

·        Sufficient supply and mixed recovery in lube demand could maintain incentive for Europe blenders to maintain low stocks.

·        The moves would coincide with prospect of seasonal dip in demand in coming weeks.

·        Firm Group I prices and more limited surplus supply of Group I base oils relative to premium-grade base oils likely to continue to incentivize buyers to boost consumption of Group II/III base oils.

·        US demand likely to get support until refiners/blenders are comfortable with inventory levels as buffer against any supply disruptions.

·        Demand likely reflects more the impact of stock-building rather than strong pick-up in end-user consumption.

·        Latin America’s demand could hold firm amid signs of tighter supply-demand balance and healthy finished lube consumption.

·        Region’s buyers could eye supplies from other markets in view of concern about supply disruptions in US, as well as higher prices for US supplies.