Global base oils demand outlook: Week of March 25

·        Crude oil prices hold close to highest levels since Q4 2023 on expectation of tighter-than-expected supply over coming months.

·        Diesel premium to crude oil holds close to lowest since start of 2024, suggesting the recent rise in prices is driven by more crude oil than by motor fuels.

·        Higher feedstock costs coincide with typical seasonal rise in base oils demand in US and Europe.

·        Expectations of sufficient supply incentivize buyers to maintain lower stocks, limiting producers’ leverage to target higher prices.

·        Asia’s base oils demand faces prospect of seasonal slowdown at start of second quarter of the year.

·        Region's demand shows signs of staying focused on certain products like heavy neutrals and Group I bright stock.

·        India’s base oils demand could stay firmer than usual amid signs of drop in supplies from more regular sources.

·        Discount of Europe’s Group I export prices to domestic prices narrows sharply.

·        Narrower discount points to tighter surplus supply.

·        Europe blenders’ preference to maintain low stocks cuts exposure to persistent demand weakness in some regions.

·        Preference to maintain low stocks leaves them exposed to tighter-than-expected availability if demand improves or supply tightens more than expected.    

·        Demand faces prospect of seasonal pick-up in coming weeks.

·        Discount of US domestic spot prices to posted prices widens.

·        Discount of US export prices to domestic prices stays unusually wide.

·        Steep price discounts support expectations of sufficient supply, curbing urgency to build larger stocks.

·        Steep price discounts could dull pressure on blenders to speed up procurement plans following rise in posted prices.