Global base oils demand outlook: Week of 22 July

·        Crude oil prices hold close to lowest levels in more than a month even amid signs of tightening supply, firm demand and forecasts of higher prices during Q3 2024.

·        Lower crude oil prices could point to moves to start to reflect fundamentals in Q4 2024, when supply tightness is expected to ease.

·        Diesel premium to crude oil slips to lowest in more than a month.

·        Lower crude prices and weaker diesel crack coincide with seasonal dip in lube demand in most markets during the summer months.

·        Dynamic could add to buyers’ preference to hold back for now. 

·        Asia’s base oils demand could stay more muted for longer even as buyers prepare for seasonal rise in demand at end of Q3 2024.

·        Signs of recovery in regional supply, combined with lower crude prices, boost incentive for buyers to manage carefully the pace of their stock-replenishment plans.

·        Europe’s base oils demand likely to face seasonal slowdown over coming weeks.

·        Seasonal slowdown and signs of mixed-to-weaker lube demand sustain incentive for blenders to maintain low stocks.

·        Overseas demand for European supplies could improve if seasonal slowdown in the region frees up supplies for export.

·        Closed arbitrage to key outlets could cap that overseas demand.

·        US base oils demand likely to hold firm amid ongoing round of stock-building as cover against any weather-related supply disruptions.

·        Latin America’s demand for US supplies likely to hold firm amid tight supply-demand dynamics in the region.

·        Latin American demand for supplies from Asia could increase as arbitrage opportunities improve and buyers seek to diversify their supply sources.

·        Demand from other overseas markets for US supplies could ease as high prices keep arbitrage shut.