· Crude oil prices hold close to highest levels since end-April amid signs of rising fuel demand during the summer months.· Diesel premium to crude edges higher from lows in April and May 2024, stays well below recent levels over past year.· Rising feedstock costs, firmer diesel premium to crude and lower base oils premium to diesel start to erode attraction of boosting base oils output.· Global base oils demand could get support from expectation that higher crude/diesel prices reduce prospect or size of any drop in base oils prices.· Asia’s base oils demand faces seasonal slowdown in India and China, signs of steady consumption in southeast Asia.· Asia’s base oils demand could start to get support from moves to lock in supplies for delivery later in Q3 2024.· Supplies for delivery at that time would help to cover typical seasonal pick-up in consumption in China at end-Q3 and in India in Q4.· Market activity could be slower in Asia for now as higher feedstock costs increase refiners’ resistance to lower prices, complicating arbitrage to markets like India and Middle East at current price levels.· Europe’s increasingly firm Group I base oils prices relative to other grades point to sustained demand for the supplies.· Tighter Group I supply could impact typical seasonal slowdown in regional demand in months of July and August.· Tighter Group I supply incentivizes buyers in markets like Africa and Middle East to target supplies from other sources.· US base oils buyers face challenge of balancing need to build stocks to cover for possibility of supply-related disruptions with recent preference to maintain lower inventories.· Round of stock-building raises prospect of boosting current demand at expense of future demand if market avoids any major supply disruptions. · Overseas demand for US supplies likely to be more muted as higher prices complicate arbitrage.· Latin America’s base oils demand for overseas supplies could hold firm if recent pick-up in lube consumption continues over coming months..Global base oils margins outlook: Week of 24 June.Global base oils arb outlook: Week of 24 June.Asia base oils demand outlook: Week of 24 June
· Crude oil prices hold close to highest levels since end-April amid signs of rising fuel demand during the summer months.· Diesel premium to crude edges higher from lows in April and May 2024, stays well below recent levels over past year.· Rising feedstock costs, firmer diesel premium to crude and lower base oils premium to diesel start to erode attraction of boosting base oils output.· Global base oils demand could get support from expectation that higher crude/diesel prices reduce prospect or size of any drop in base oils prices.· Asia’s base oils demand faces seasonal slowdown in India and China, signs of steady consumption in southeast Asia.· Asia’s base oils demand could start to get support from moves to lock in supplies for delivery later in Q3 2024.· Supplies for delivery at that time would help to cover typical seasonal pick-up in consumption in China at end-Q3 and in India in Q4.· Market activity could be slower in Asia for now as higher feedstock costs increase refiners’ resistance to lower prices, complicating arbitrage to markets like India and Middle East at current price levels.· Europe’s increasingly firm Group I base oils prices relative to other grades point to sustained demand for the supplies.· Tighter Group I supply could impact typical seasonal slowdown in regional demand in months of July and August.· Tighter Group I supply incentivizes buyers in markets like Africa and Middle East to target supplies from other sources.· US base oils buyers face challenge of balancing need to build stocks to cover for possibility of supply-related disruptions with recent preference to maintain lower inventories.· Round of stock-building raises prospect of boosting current demand at expense of future demand if market avoids any major supply disruptions. · Overseas demand for US supplies likely to be more muted as higher prices complicate arbitrage.· Latin America’s base oils demand for overseas supplies could hold firm if recent pick-up in lube consumption continues over coming months..Global base oils margins outlook: Week of 24 June.Global base oils arb outlook: Week of 24 June.Asia base oils demand outlook: Week of 24 June
