Global base oils - week of May 15: Demand outlook

·        Crude oil prices stay weak as concern about global economic slowdown outweighs prospect of tighter crude oil supplies.

·        Diesel prices hold steadier in recent weeks relative to crude, at lowest levels in more than a year.

·        US/Europe economies continue to face pressure to bring down high inflation through high interest rates.

·        China faces pressure from too-low inflation, pointing to relative weakness of economic recovery.

·        Volatile crude oil prices, high base oils prices relative to diesel, concern about demand outlook, prospect of slower-than-usual pick-up in Q2 lube consumption add to attraction for blenders to maintain lower stocks.

·        Procurement of smaller volumes would increase blenders’ need to replenish inventories more frequently.

·        Blenders’ lower stocks would cut their ability to absorb impact of any unexpected fall in supply.