Global base oils - week of Dec 4: Demand outlook

·        Crude oil prices extend fall amid concern supply could exceed demand in Q1 2024.

·        Gasoil premium to crude oil extends gradual fall, slips below year-to-date average.

·        High interest rates and signs of weaker economic growth in major global economies outweigh expectations that interest rates have peaked.

·        Global base oils demand faces seasonal slowdown, could get support from blenders’ low stocks.

·        Demand could get further support from expectations that base oils prices face more limited risk of significant price adjustment amid more balanced fundamentals in Asia and Europe.

·        China’s base oils consumption shows more mixed signals, suggesting demand may be bottoming out.

·        Any rise in country’s lube demand would highlight blenders’ low stocks and their need to replenish those stocks fast.

·        China’s lube demand likely to face seasonal pick-up from 2H Feb 2023.

·        India’s base oils demand likely to hold steady to meet seasonal rise in consumption.

·        Indian blenders could take longer to lock in supplies in view of plentiful availability from different sources and still-firm prices versus competing fuels prices.

·        Europe’s base oils demand could get support from prospect of smaller slowdown in lube demand at end-2023 vs year earlier and stronger pick-up in demand at start of 2024.

·        Any such trend would speed up blenders’ need to replenish base oils inventories.

·        Blenders’ already-lower stocks would add to need to replenish inventories.

·        Domestic US base oils demand faces pressure from seasonal slowdown in lube consumption and expectations of healthy availability.

·        Overseas demand for US base oils could get boost from more competitive prices, especially in markets like Europe and in markets that Europe typically targets with export supplies.

·        Demand in Latin America likely to be more mixed.

·        Demand in Latin America likely to hold firm for base oils for lubricants production but weaken for other uses.