· Crude oil prices mostly hold in narrower range since mid-Oct 2023 as prospect of slower economic growth balances out geopolitical concerns in Mideast Gulf.· Diesel premium to crude continues to edge down, slipping to three-month low.· US interest rates expected to hold steady, stay at elevated levels well into next year.· Europe’s interest rates likely to start falling before US interest rates in face of flagging growth, lower inflation. · Global base oils market faces prospect of simultaneous seasonal and economic slowdown, combined with drop in demand from Mexico.· China’s base oils demand for regional supplies could slow down after rise in country’s September supplies boost stocks, while lube demand stays muted.· Asia’s lube demand likely to rise in Q4 2023 and Q1 2024.· Trend would absorb more regional base oils supplies and curb surplus flows to other regions.· Prospect of more limited arbitrage flows from Asia could support firmer base oils demand in other markets for supplies from other regions.· Trend would boost demand in Latin America for base oils supplies from US to produce lubricants.· Prospect of smaller-than-expected seasonal slowdown in Latin America’s lube demand over coming months would add to demand for US supplies to produce lubricants.· Mexico’s demand for US base oils faces prospect of falling following imposition of stricter rules on oil product and petrochemical imports into the country.· Indian buyers could adjust procurement plans if any slowdown in Mexico’s demand for US base oils prompts US sellers to eye other markets instead.· Dynamic could give Indian buyers more leverage, balance out impact of lower-than-usual flow of supplies from Asia. · Europe’s base oils demand could fall less steeply over coming months compared with end-2022 as blenders’ low inventories require that they replenish stocks more frequently.· European blenders focused on clearing high inventories at end-2022, compounding slowdown in demand at that time.· A smaller-than-expected fall in Europe’s demand would partially counter signs of demand weakness in export outlets like Turkey and Egypt..Global base oils - week of Oct 30: Price outlook - arbitrage
· Crude oil prices mostly hold in narrower range since mid-Oct 2023 as prospect of slower economic growth balances out geopolitical concerns in Mideast Gulf.· Diesel premium to crude continues to edge down, slipping to three-month low.· US interest rates expected to hold steady, stay at elevated levels well into next year.· Europe’s interest rates likely to start falling before US interest rates in face of flagging growth, lower inflation. · Global base oils market faces prospect of simultaneous seasonal and economic slowdown, combined with drop in demand from Mexico.· China’s base oils demand for regional supplies could slow down after rise in country’s September supplies boost stocks, while lube demand stays muted.· Asia’s lube demand likely to rise in Q4 2023 and Q1 2024.· Trend would absorb more regional base oils supplies and curb surplus flows to other regions.· Prospect of more limited arbitrage flows from Asia could support firmer base oils demand in other markets for supplies from other regions.· Trend would boost demand in Latin America for base oils supplies from US to produce lubricants.· Prospect of smaller-than-expected seasonal slowdown in Latin America’s lube demand over coming months would add to demand for US supplies to produce lubricants.· Mexico’s demand for US base oils faces prospect of falling following imposition of stricter rules on oil product and petrochemical imports into the country.· Indian buyers could adjust procurement plans if any slowdown in Mexico’s demand for US base oils prompts US sellers to eye other markets instead.· Dynamic could give Indian buyers more leverage, balance out impact of lower-than-usual flow of supplies from Asia. · Europe’s base oils demand could fall less steeply over coming months compared with end-2022 as blenders’ low inventories require that they replenish stocks more frequently.· European blenders focused on clearing high inventories at end-2022, compounding slowdown in demand at that time.· A smaller-than-expected fall in Europe’s demand would partially counter signs of demand weakness in export outlets like Turkey and Egypt..Global base oils - week of Oct 30: Price outlook - arbitrage
