· Global crude oil prices hold close to multi-year low as concerns about weak demand and rising supply outweigh support from short-term supply disruptions.· Diesel premium to crude oil holds close to lowest in more than a year, adding to signs of weaker demand.· Weak crude and diesel prices contrast with unusually high base oils margins even as weaker fuel demand raises prospect of slowdown in lubricants consumption. · Growing disconnect between crude, diesel and base oils prices, along with expectations of sufficient base oils supply and muted lube demand, incentivize blenders to hold back.· Demand could be steadier in markets with firmer lube demand, such as India.· Demand in India could slow down amid signs of recent pick-up in shipments to that market, helping to cover immediate requirements.· More feasible arbitrage to move supplies from Asia to China in recent weeks points to steady-to-firm demand in that market, especially for heavy-neutrals base oils.· China’s demand for lighter grades could be more muted as concern about price volatility boosts attraction of procuring smaller volumes from domestic refiners.· Demand is likely to be more cautious in markets like Europe, where shrinking lube consumption deters blenders from holding large stocks.· Europe’s firm prices relative to other markets help sustain sufficient supplies, further curbing buyers’ need to hold larger stocks.· US base oils demand could be slower as signs of weaker supply-demand fundamentals contrast with unusually strong base oil margins.· Dynamic adds to incentive for buyers and distributors to tap existing stocks to cover requirements.· Such moves would limit any boost from seasonal pick-up in consumption that is anyway likely to be more muted than usual.· Latin America’s base oils demand could similarly be more muted amid expectations of improving supply and additional price adjustments.· Demand for US supplies could get a boost if arbitrage from Asia became less feasible..Global base oils margins outlook: Week of 16 Sept.Global base oils arb outlook: Week of 16 Sept.Asia base oils demand outlook: Week of 16 Sept
· Global crude oil prices hold close to multi-year low as concerns about weak demand and rising supply outweigh support from short-term supply disruptions.· Diesel premium to crude oil holds close to lowest in more than a year, adding to signs of weaker demand.· Weak crude and diesel prices contrast with unusually high base oils margins even as weaker fuel demand raises prospect of slowdown in lubricants consumption. · Growing disconnect between crude, diesel and base oils prices, along with expectations of sufficient base oils supply and muted lube demand, incentivize blenders to hold back.· Demand could be steadier in markets with firmer lube demand, such as India.· Demand in India could slow down amid signs of recent pick-up in shipments to that market, helping to cover immediate requirements.· More feasible arbitrage to move supplies from Asia to China in recent weeks points to steady-to-firm demand in that market, especially for heavy-neutrals base oils.· China’s demand for lighter grades could be more muted as concern about price volatility boosts attraction of procuring smaller volumes from domestic refiners.· Demand is likely to be more cautious in markets like Europe, where shrinking lube consumption deters blenders from holding large stocks.· Europe’s firm prices relative to other markets help sustain sufficient supplies, further curbing buyers’ need to hold larger stocks.· US base oils demand could be slower as signs of weaker supply-demand fundamentals contrast with unusually strong base oil margins.· Dynamic adds to incentive for buyers and distributors to tap existing stocks to cover requirements.· Such moves would limit any boost from seasonal pick-up in consumption that is anyway likely to be more muted than usual.· Latin America’s base oils demand could similarly be more muted amid expectations of improving supply and additional price adjustments.· Demand for US supplies could get a boost if arbitrage from Asia became less feasible..Global base oils margins outlook: Week of 16 Sept.Global base oils arb outlook: Week of 16 Sept.Asia base oils demand outlook: Week of 16 Sept
