· Crude oil prices stay high as geopolitical tensions outweigh supply-demand fundamentals.· Diesel premium to crude oil stays high amid lower-than-usual distillate stocks in key markets.· Interest rates likely to remain high in US and Europe well into next year.· Trend likely to slow economic activity, incentivize blenders to maintain lower stocks.· Pressure of high interest rates and economic slowdown coincides with seasonal dip in lube consumption in Americas and Europe over coming months.· Any subsequent base oils supply-build could be smaller than expected as signs of firmer-than-expected demand in Latin America and Asia in Q3 2023 curbed global build-up of surplus base oils supplies during that period.· Trend leaves global refiners better positioned to avoid a significant supply-build in Q4 2023 and early next year if they manage production levels carefully in the coming months.· More balanced supply-demand fundamentals would support steadier prices on outright basis and relative to feedstock and competing fuels. · Signs of a supply-build would by contrast incentivize blenders to hold back for longer because of concern/expectations that prices would adjust to reflect the weaker fundamentals.· Latin America’s lube demand gets support from firm consumption in Brazil in Q3 2023, raising prospect of smaller-than-expected seasonal slowdown in consumption in Q4 2023.· Rebounding heating oil prices likely to sustain unusually strong base oils demand in Mexico over coming weeks.· Trend curbs need for US refiners to line up other outlets for surplus light-grade supplies.· Trend likely to boost demand in India for light-grade supplies from Asia and Mideast Gulf.· Asia’s lubricating oil demand unexpectedly rises in Q3 2023, raising prospect of firmer-than-expected consumption in Q4 2023.· Asia’s firmer lube demand limits supply-build in Q3 2023, curbs volume of surplus supplies to move to more distant markets in Q4 2023.· More balanced supplies likely to provide additional price support in Asia, curb downward pressure on prices in other regions.· More balanced supply-demand fundamentals likely to incentivize blenders to maintain more typical procurement plans..Global base oils - week of Oct 23: Price outlook - margins
· Crude oil prices stay high as geopolitical tensions outweigh supply-demand fundamentals.· Diesel premium to crude oil stays high amid lower-than-usual distillate stocks in key markets.· Interest rates likely to remain high in US and Europe well into next year.· Trend likely to slow economic activity, incentivize blenders to maintain lower stocks.· Pressure of high interest rates and economic slowdown coincides with seasonal dip in lube consumption in Americas and Europe over coming months.· Any subsequent base oils supply-build could be smaller than expected as signs of firmer-than-expected demand in Latin America and Asia in Q3 2023 curbed global build-up of surplus base oils supplies during that period.· Trend leaves global refiners better positioned to avoid a significant supply-build in Q4 2023 and early next year if they manage production levels carefully in the coming months.· More balanced supply-demand fundamentals would support steadier prices on outright basis and relative to feedstock and competing fuels. · Signs of a supply-build would by contrast incentivize blenders to hold back for longer because of concern/expectations that prices would adjust to reflect the weaker fundamentals.· Latin America’s lube demand gets support from firm consumption in Brazil in Q3 2023, raising prospect of smaller-than-expected seasonal slowdown in consumption in Q4 2023.· Rebounding heating oil prices likely to sustain unusually strong base oils demand in Mexico over coming weeks.· Trend curbs need for US refiners to line up other outlets for surplus light-grade supplies.· Trend likely to boost demand in India for light-grade supplies from Asia and Mideast Gulf.· Asia’s lubricating oil demand unexpectedly rises in Q3 2023, raising prospect of firmer-than-expected consumption in Q4 2023.· Asia’s firmer lube demand limits supply-build in Q3 2023, curbs volume of surplus supplies to move to more distant markets in Q4 2023.· More balanced supplies likely to provide additional price support in Asia, curb downward pressure on prices in other regions.· More balanced supply-demand fundamentals likely to incentivize blenders to maintain more typical procurement plans..Global base oils - week of Oct 23: Price outlook - margins