Global base oils demand outlook: Week of March 4

·        Crude oil prices hold close to highest since Nov 2023 as OPEC+ extends crude output cuts through Q2 2024.

·        Diesel premium to crude oil stays firmer than in Q4 2023, down from highs in early Feb 2024.

·        Global base oils demand usually gets a seasonal boost from end of first quarter of the year in preparation for spring oil-change season.

·        Asia’s base oils demand likely to get support from such a boost and from moves to increase sales ahead of financial year-end in some markets.

·        China’s base oils demand shows signs of improving gradually, with buyers preferring to maintain lower stocks.

·        China’s demand likely to get support from need for buyers to replenish lower stocks more frequently.

·        China’s demand for overseas supplies focuses on Group I bright stock.

·        India’s base oils demand could be more muted as buyers’ healthy stocks curb urgency to lock in more supplies unless prices are at competitive levels.

·        Signs of prices at competitive levels in markets like US could support steady demand from India.

·        Europe’s base oils demand could get support from seasonal pick-up in lube demand even if blenders stick with strategy of maintaining lower inventories.

·        Strategy requires more frequent replenishment of supplies, especially as and when demand improves.

·        Strategy leaves buyers more exposed if availability of supply is tighter than expected.

·        US base oils demand shows little sign of reacting to recent moves by several refiners to raise posted prices.

·        Wide gap between US domestic and export prices, and signs of healthy availability of supply, support buyers’ strategy of maintaining low stocks.

·        Trend could support more frequent moves to top up inventories when seasonal pick-up in lube demand begins.