Global base oils demand outlook: Week of 28 Oct

·        Global crude oil prices fall at start of the week as easing geopolitical concerns shift focus back to weak supply-demand fundamentals.

·        Diesel premium to crude oil holds close to lowest in more than two years.

·        Lower crude oil prices set to trigger jump in base oils premium to crude oil and diesel.

·        Any such rise in base oils premium would come at a time when global base oils demand faces seasonal slowdown ahead of typical sharp fall in lube consumption in month of December.

·        Base oils supply set to face more upward pressure as demand tapers off in coming weeks and plant maintenance draws to a close.

·        Rising base oils margins and weaker supply-demand fundamentals could add to buyers’ preference to hold back on expectations that prices will adjust to better reflect supply-demand fundamentals.

·        Demand could hold steadier if market avoids large build-up of surplus supplies in coming months.

·        Asia’s base oils demand likely to stay mixed, with China covering more of its requirements with supplies from domestic refiners.

·        Demand in southeast Asia and India could get support from moves to replenish low stocks.

·        Europe’s base oils demand likely to stay muted as blenders prepare for seasonal dip in lube consumption at year-end.

·        Overseas demand for European supplies could stay more muted, with arbitrage still hard to work.

·        US base oils demand set to ease as blenders focus on working down existing stocks of feedstock and finished lube supplies.

·        Latin America’s base oils demand could face steeper slowdown in coming weeks if lube consumption weakens, compounding seasonal slowdown.

·        Regional demand could see stronger pick-up at year-end or early next year if buyers cut inventories more steeply in order to benefit from expectations of more competitive prices in coming months.