· Crude oil prices hold steady over past week close to highest since Nov 2022.· Crude oil prices likely to extend upward trend as increasingly tight supply outweighs any slowdown in demand.· Diesel prices stay unusually high versus crude, reflecting tight middle distillates supply.· Russia’s temporary ban on diesel/gasoline exports likely to provide further support to diesel values.· Growing number of central banks pause interest-rate increases as inflation continues to ease.· Interest rates in US and Europe likely to remain elevated well into next year – keeping squeeze on economic activity.· High interest rates incentivize blenders to minimize stocks.· Prospect of slower economic growth in major markets likely to compound seasonal slowdown in lube demand in coming months.· Lube demand weakness complicates blenders’ moves to raise prices to pass on higher production/feedstock costs.· Those difficulties increase importance/attraction of locking in base oils supplies to limit exposure to even higher prices.· Weak base oils prices continue to incentivize refiners to minimize base oils output, adding to blenders’ incentive to lock in supplies.· Blenders in several regions announce lubricant price increases in response to higher costs.· Trend could spur end-users to bring forward procurement plans before price-increases come into effect.· Lube demand shows signs of holding firm in Latin America, mixed in other markets.· Latin America’s lube demand set to face seasonal slowdown in Q4 from Q3 2023. But consumption likely to stay higher than earlier expectations.· US blenders likely to be more comfortable trimming feedstock supplies once peak hurricane season has passed.· Asia’s lube demand faces seasonal rise in Q4 consumption vs Q3 2023, and even larger rise in Q1 2024.· Seasonal pick-up in China’s lube demand at end-Q3 show signs of being weaker than usual..Global base oils - week of Sep 25: Price outlook - margins
· Crude oil prices hold steady over past week close to highest since Nov 2022.· Crude oil prices likely to extend upward trend as increasingly tight supply outweighs any slowdown in demand.· Diesel prices stay unusually high versus crude, reflecting tight middle distillates supply.· Russia’s temporary ban on diesel/gasoline exports likely to provide further support to diesel values.· Growing number of central banks pause interest-rate increases as inflation continues to ease.· Interest rates in US and Europe likely to remain elevated well into next year – keeping squeeze on economic activity.· High interest rates incentivize blenders to minimize stocks.· Prospect of slower economic growth in major markets likely to compound seasonal slowdown in lube demand in coming months.· Lube demand weakness complicates blenders’ moves to raise prices to pass on higher production/feedstock costs.· Those difficulties increase importance/attraction of locking in base oils supplies to limit exposure to even higher prices.· Weak base oils prices continue to incentivize refiners to minimize base oils output, adding to blenders’ incentive to lock in supplies.· Blenders in several regions announce lubricant price increases in response to higher costs.· Trend could spur end-users to bring forward procurement plans before price-increases come into effect.· Lube demand shows signs of holding firm in Latin America, mixed in other markets.· Latin America’s lube demand set to face seasonal slowdown in Q4 from Q3 2023. But consumption likely to stay higher than earlier expectations.· US blenders likely to be more comfortable trimming feedstock supplies once peak hurricane season has passed.· Asia’s lube demand faces seasonal rise in Q4 consumption vs Q3 2023, and even larger rise in Q1 2024.· Seasonal pick-up in China’s lube demand at end-Q3 show signs of being weaker than usual..Global base oils - week of Sep 25: Price outlook - margins