Global base oils demand outlook: Week of 26 Aug

·        Global crude oil prices hold in lower range, with more bearish supply-demand fundamentals outweighing supportive factors such as geopolitical risks and a weaker US dollar versus other currencies.

·        Diesel premium to crude oil stays close to weakest level in more than a year.

·        Global base oils demand could turn more cautious as base oils margins extend rise to levels that point to increasingly firm supply-demand fundamentals.

·        Buyers that deem supply-demand fundamentals to be less tight could decide to hold off in anticipation of a price adjustment that reflects those less tight fundamentals.

·        Surge in shipments to southeast Asia in July 2024 point to sufficient supply in that region.

·        Restart of base oils units in China likely to boost supply, cover more of country’s seasonal rise in demand, curbing demand for overseas shipments.

·        Demand in Europe could stay more cautious as base oils prices extend rise relative to prices in other regions, raising prospect of more supplies targeting European market.

·        Any such rise in supplies would contrast with signs of still-muted lube demand in the region.

·        Buyers’ stock-building in US raises prospect of sufficient supply in that market, especially if any weather-related supply disruptions are more muted than expected.

·        Typical seasonal pick-up in US demand in Sept 2024 could be more muted than usual as buyers first tap and work down the stocks they build up in recent months.

·        Latin America’s base oils demand could start to ease, with any additional supplies from overseas markets unlikely to reach the region before the fourth quarter of the year.