· Crude oil prices rise last week, stay well below March-April 2024 levels amid mixed signals about state of economic growth in US/China and uncertainty about timing of US interest-rate cuts.· Diesel premium to crude edges up from lowest since Q2 2023, stays well below levels over most of past year.· Global base oils prices hold onto most of their recent gains even after this month’s fall in crude prices and with weaker diesel crack.· Firm base oils prices boost prospect of supply outpacing demand.· Signs of sufficient base oils supply of most products in most markets give blenders the optionality to maintain low stocks and procure smaller volumes more frequently.· Concern about supply outpacing demand and any subsequent price-response adds to blenders’ incentive to maintain lower stocks. · China’s demand for imported cargoes of Group II base oils shows signs of rising after supply tightened in response to closed arbitrage.· China’s total base oils demand shows signs of staying muted.· India’s base oils demand shows signs of staying lower as buyers resist regional refiners’ higher prices, making arbitrage less feasible.· Concern that prices could ease could incentivize India's buyers to work down existing inventories first before seeking additional supplies.· Europe’s demand for Group I brightstock could get support from concern about tighter availability of the product because of a larger-than-expected recent drop in supply.· Europe’s demand for premium-grade base oils could get support from sufficient supply, even when regional plants undergo maintenance work.· Firm US light-grade base oils prices relative to feedstock prices and to other regions point to firmer demand or tighter supply.· Firm prices raise prospect of rise in surplus volumes if demand is insufficient to absorb any pick-up in supply.· Lack of any marked change in arbitrage opportunities to move overseas supplies to US suggests that its domestic supply remains sufficient to meet demand.
· Crude oil prices rise last week, stay well below March-April 2024 levels amid mixed signals about state of economic growth in US/China and uncertainty about timing of US interest-rate cuts.· Diesel premium to crude edges up from lowest since Q2 2023, stays well below levels over most of past year.· Global base oils prices hold onto most of their recent gains even after this month’s fall in crude prices and with weaker diesel crack.· Firm base oils prices boost prospect of supply outpacing demand.· Signs of sufficient base oils supply of most products in most markets give blenders the optionality to maintain low stocks and procure smaller volumes more frequently.· Concern about supply outpacing demand and any subsequent price-response adds to blenders’ incentive to maintain lower stocks. · China’s demand for imported cargoes of Group II base oils shows signs of rising after supply tightened in response to closed arbitrage.· China’s total base oils demand shows signs of staying muted.· India’s base oils demand shows signs of staying lower as buyers resist regional refiners’ higher prices, making arbitrage less feasible.· Concern that prices could ease could incentivize India's buyers to work down existing inventories first before seeking additional supplies.· Europe’s demand for Group I brightstock could get support from concern about tighter availability of the product because of a larger-than-expected recent drop in supply.· Europe’s demand for premium-grade base oils could get support from sufficient supply, even when regional plants undergo maintenance work.· Firm US light-grade base oils prices relative to feedstock prices and to other regions point to firmer demand or tighter supply.· Firm prices raise prospect of rise in surplus volumes if demand is insufficient to absorb any pick-up in supply.· Lack of any marked change in arbitrage opportunities to move overseas supplies to US suggests that its domestic supply remains sufficient to meet demand.
