Global base oils demand outlook: Week of 2 Dec

·        Global crude oil prices hold in narrow, lower range since mid-Oct 2024, with OPEC+ facing challenge of when to adjust output plans amid expectations of growing crude supply surplus in 2025.

·        Diesel premium to crude oil holds relatively steady at lower level since start of Q2 2024.

·        Weaker crude oil and diesel prices add to attraction of sustaining firmer output of products with higher margins, such as base oils.

·        Global base oils demand could start to focus soon on typical pick-up in consumption at start of new year.

·        Expectations of healthy availability of supply give buyers the leverage to hold off for longer before securing supplies to meet pick-up in consumption.

·        Expectations that outright lube consumption growth likely to stay weak in most markets early next year add to attraction of securing smaller volumes and maintaining lower stocks.

·        Asia’s base oils demand likely to stay muted amid sufficient supplies, seasonal slowdown in consumption.

·        China’s weak base oils demand counters impact of drop in domestic supply, curbing need for additional volumes from overseas markets.

·        India’s demand likely to focus on securing sufficient volumes to meet immediate requirements.

·        Buyers likely to hold off building larger stocks in anticipation of improving availability of supply, and prices that reflect those changing fundamentals.   

·        Europe’s base oils demand could see more muted seasonal pick-up early next year.

·        Healthy availability of supply and shrinking lube consumption incentivize buyers to top up inventories later and with smaller volumes.

·        US demand could get boost from moves to replenish lower stocks early next year.

·        Widening gap between US spot and posted prices could prompt buyers to procure smaller-than-usual volumes amid concern about further price adjustments.

·        Latin America’s base oils demand could get boost if supply-demand fundamentals remain more balanced during Q4 2024.

·        Overseas demand for supplies from US and Europe could ease in short-term as lower export prices raise prospect of growing competition between suppliers.

·        Demand could then rise more strongly once buyers are confident that they face less exposure to any further price adjustments.