Global base oils demand outlook: Week of 22 April

·        Crude oil prices fall to lowest this month as expectations of higher interest rates for longer raise prospect of curbing demand, countering impact of tighter-than-expected supply.

·        Diesel premium to crude oil extends fall to lowest since Q2 2023, cutting attraction of producing the motor fuel.

·        Recent volatility of crude oil prices, combined with more sustained weakness of diesel prices, could incentivize base oils buyers to hold back.

·        Signs of healthy base oils availability add to buyers’ flexibility to hold off, and the leverage to procure on a need-to basis even with a seasonal pick-up in demand in markets like US and Europe.

·        Asia’s base oils demand shows more mixed signals as buyers take time to replenish stocks.

·        China’s demand for overseas supplies of Group II base oils could slow further amid pick-up in domestic supply, preference to maintain low stocks.

·        India’s buyers could hold off in anticipation of price-adjustments in response to weaker crude oil/diesel prices.

·        India’s base oils demand for supplies from Asia could get support from concern about less regular availability from other sources.

·        Muted rise in US/Europe domestic base oils prices points to expectations of sufficient availability even with seasonal rise in demand.

·        Expectations of sufficient availability boost attraction for buyers to maintain low stocks.

·        Demand for Group II base oils in Middle East could ease as wave of overseas shipments reaches the region.