· Crude oil prices slip to lower end of narrow range they have held in since early-May 2024.· Prices face pressure even after OPEC+ agrees to extend crude oil production cuts through 2025.· Prices face pressure as concern about weak economic growth, lingering inflation, and high interest rates coincide with expectations of increasingly sufficient crude oil supply.· Diesel premium to crude oil stays close to lowest in more than a year.· Weak diesel premium magnifies impact and benefit for refiners of rising base oils premium to diesel.· Widening disconnect between crude, diesel and base oils prices could incentivize buyers to procure smaller volumes to limit their exposure to any price correction.· Base oils demand shows signs of slowing in key markets throughout Asia at same time as firm margins incentivize refiners to raise output.· CFR India Group II prices move to unusually narrow differential to FOB NE Asia cargo prices, highlighting the more muted buying interest.· China’s domestic Group II base oils margins stay relatively weak even with several planned plant shutdowns, suggesting demand still struggles to absorb lower supply.· Europe’s demand for Group I brightstock could get additional support from concern about sufficient availability of supply.· Rising brightstock prices could add to rather than cut demand because of limited means to raise supply in response to higher prices.· Europe’s firm Group I prices relative to Group II and Group III base oils could boost buying interest in premium-grade base oils.· Any such move would have less impact on brightstock demand, which is harder to substitute with other grades.· US domestic base oils demand likely to hold steady amid expectations that any supply tightness will be temporary.· Increasingly firm US prices relative to competing fuel prices and relative to other regions could add to buyers’ preference to limit the size of a build-up of their inventories.· Overseas demand for US supplies likely to ebb amid seasonal slowdown in consumption and more competitive supply options from other sources..Global base oils margins outlook: Week of 3 June.Global base oils arb outlook: Week of 3 June.Asia base oils demand outlook: Week of 3 June
· Crude oil prices slip to lower end of narrow range they have held in since early-May 2024.· Prices face pressure even after OPEC+ agrees to extend crude oil production cuts through 2025.· Prices face pressure as concern about weak economic growth, lingering inflation, and high interest rates coincide with expectations of increasingly sufficient crude oil supply.· Diesel premium to crude oil stays close to lowest in more than a year.· Weak diesel premium magnifies impact and benefit for refiners of rising base oils premium to diesel.· Widening disconnect between crude, diesel and base oils prices could incentivize buyers to procure smaller volumes to limit their exposure to any price correction.· Base oils demand shows signs of slowing in key markets throughout Asia at same time as firm margins incentivize refiners to raise output.· CFR India Group II prices move to unusually narrow differential to FOB NE Asia cargo prices, highlighting the more muted buying interest.· China’s domestic Group II base oils margins stay relatively weak even with several planned plant shutdowns, suggesting demand still struggles to absorb lower supply.· Europe’s demand for Group I brightstock could get additional support from concern about sufficient availability of supply.· Rising brightstock prices could add to rather than cut demand because of limited means to raise supply in response to higher prices.· Europe’s firm Group I prices relative to Group II and Group III base oils could boost buying interest in premium-grade base oils.· Any such move would have less impact on brightstock demand, which is harder to substitute with other grades.· US domestic base oils demand likely to hold steady amid expectations that any supply tightness will be temporary.· Increasingly firm US prices relative to competing fuel prices and relative to other regions could add to buyers’ preference to limit the size of a build-up of their inventories.· Overseas demand for US supplies likely to ebb amid seasonal slowdown in consumption and more competitive supply options from other sources..Global base oils margins outlook: Week of 3 June.Global base oils arb outlook: Week of 3 June.Asia base oils demand outlook: Week of 3 June
