· Crude oil prices hold firm, testing new highs, likely to trend higher in short-term amid signs of immediate supply tightness.· Further rise in crude oil prices faces growing resistance in medium term in face of weaker supply-demand fundamentals.· Diesel premium to crude oil stays lower than recent highs, still much higher than usual.· Firmer feedstock/diesel prices support higher base oils prices.· Rising base oils prices in recent weeks incentivized buyers to bring forward procurement plans to lock in supplies at previous prices.· That temporary pick-up in demand likely to ease in coming weeks following completion of those procurement plans.· Prospect of seasonal rise in base oils supply and slowdown in demand over coming months would put pressure on base oils prices.· Weaker demand would give buyers leverage to hold off and assess sustainability of crude oil prices at current levels.· Base oils supply would need to more closely align with demand to support base oils prices that outpace higher crude/diesel prices.· Relative lack of scheduled plant maintenance work over coming months makes such moves more challenging.· Trend raises prospect of refiners more actively adjusting output to maintain supply-demand balance, or of build-up of surplus supply as output outpaces weakening demand.· Lighter period of maintenance work in coming months contrasts with Q2 2023..· Slump in global base oils output in June 2023 cushions impact of weak global base oils/lube demand in Q3 2023..· Output slumped because of widespread plant shutdowns in all the key regions..· Expectation of rise in total lube demand in Asia, Europe and Latin America in Q4 2023 masks lower-than-expected growth in Asia and falling demand in Europe..· Demand trends incentivize refiners to focus on Asia and Latin America markets and to trim supplies to Europe. .Global base oils - week of Oct 2: Price outlook - arbitrage
· Crude oil prices hold firm, testing new highs, likely to trend higher in short-term amid signs of immediate supply tightness.· Further rise in crude oil prices faces growing resistance in medium term in face of weaker supply-demand fundamentals.· Diesel premium to crude oil stays lower than recent highs, still much higher than usual.· Firmer feedstock/diesel prices support higher base oils prices.· Rising base oils prices in recent weeks incentivized buyers to bring forward procurement plans to lock in supplies at previous prices.· That temporary pick-up in demand likely to ease in coming weeks following completion of those procurement plans.· Prospect of seasonal rise in base oils supply and slowdown in demand over coming months would put pressure on base oils prices.· Weaker demand would give buyers leverage to hold off and assess sustainability of crude oil prices at current levels.· Base oils supply would need to more closely align with demand to support base oils prices that outpace higher crude/diesel prices.· Relative lack of scheduled plant maintenance work over coming months makes such moves more challenging.· Trend raises prospect of refiners more actively adjusting output to maintain supply-demand balance, or of build-up of surplus supply as output outpaces weakening demand.· Lighter period of maintenance work in coming months contrasts with Q2 2023..· Slump in global base oils output in June 2023 cushions impact of weak global base oils/lube demand in Q3 2023..· Output slumped because of widespread plant shutdowns in all the key regions..· Expectation of rise in total lube demand in Asia, Europe and Latin America in Q4 2023 masks lower-than-expected growth in Asia and falling demand in Europe..· Demand trends incentivize refiners to focus on Asia and Latin America markets and to trim supplies to Europe. .Global base oils - week of Oct 2: Price outlook - arbitrage