· Crude oil prices extend breakout from $72-77/bl range, climb to highest since April.· Diesel prices keep pace with higher crude prices.· Lower-than-expected US inflation in June raises expectations that predicted rise in interest rates at end-July could be the last.· US dollar weakens versus other currencies on expectations that round of US interest-rate increases close to ending.· IEA continues to expect crude oil supply to tighten in 2H 2023, but weaker-than-expected demand set to cut the size of the deficit.· Weaker US currency, higher expectations of ‘soft-landing’ for US economy and prospect of tighter crude oil supply provide further support to crude oil prices.· Europe’s economic outlook stays weak as industrial production growth flatlines and interest rates set to rise further.· China’s weaker-than-expected economic recovery shows signs of extending into Q3 2023.· Asia’s economic outlook more mixed, with focus starting to switch to timing of interest-rate cuts rather than rate-increases amid easing inflation pressures.· Rising crude prices/feedstock costs unlikely to trigger any immediate change in lube blenders’ procurement plans.· Cost of money set to stay high, even if US interest rates are close to peaking, deterring companies from holding large stocks.· Expectations of easy access to base oils supply as and when required curbs further any need to build larger stocks.· Blenders’ strategy of holding leaner inventories adds to demand slowdown in 1H 2023 as they trim existing stocks.· Demand could get support in 2H 2023 as blenders procure supplies more frequently to maintain lower inventories..Global base oils - week of July 17: Price outlook - margins
· Crude oil prices extend breakout from $72-77/bl range, climb to highest since April.· Diesel prices keep pace with higher crude prices.· Lower-than-expected US inflation in June raises expectations that predicted rise in interest rates at end-July could be the last.· US dollar weakens versus other currencies on expectations that round of US interest-rate increases close to ending.· IEA continues to expect crude oil supply to tighten in 2H 2023, but weaker-than-expected demand set to cut the size of the deficit.· Weaker US currency, higher expectations of ‘soft-landing’ for US economy and prospect of tighter crude oil supply provide further support to crude oil prices.· Europe’s economic outlook stays weak as industrial production growth flatlines and interest rates set to rise further.· China’s weaker-than-expected economic recovery shows signs of extending into Q3 2023.· Asia’s economic outlook more mixed, with focus starting to switch to timing of interest-rate cuts rather than rate-increases amid easing inflation pressures.· Rising crude prices/feedstock costs unlikely to trigger any immediate change in lube blenders’ procurement plans.· Cost of money set to stay high, even if US interest rates are close to peaking, deterring companies from holding large stocks.· Expectations of easy access to base oils supply as and when required curbs further any need to build larger stocks.· Blenders’ strategy of holding leaner inventories adds to demand slowdown in 1H 2023 as they trim existing stocks.· Demand could get support in 2H 2023 as blenders procure supplies more frequently to maintain lower inventories..Global base oils - week of July 17: Price outlook - margins