Global base oils demand outlook: Week of 4 Nov

·        Global crude oil prices get support from OPEC+ move to delay planned rise in production.

·        OPEC+ move highlights concern about weak market fundamentals and prospect of rising surplus supply in 2025.

·        Diesel premium to crude oil holds at low level in narrow range since end-April 2024, staying far below levels in 2022-2023.

·        Weak crude oil fundamentals and low diesel crack add to downward pressure on base oils prices unless supply-demand fundamentals are unusually strong.

·        Base oils supply-demand fundamentals likely to weaken over coming months.

·        Seasonal slowdown in global base oils demand at year-end and expectations of growing surplus supply likely to incentivize buyers to hold back.

·        Expectations of lower prices add to buyers’ incentive to hold back.

·        Asia’s base oils demand could stay firmer than in other regions after tighter supply in recent months leaves blenders with lower stocks in markets like southeast Asia.

·        China’s base oils demand shows signs of holding firm for domestic supplies, staying weak for overseas supplies.

·        Europe’s base oils demand faces pressure from signs of healthy availability of all grades combined with sustained slide in finished lube consumption.

·        Weak fundamentals incentivize blenders to maintain low stocks.

·        Blenders’ low stocks likely to prompt more frequent moves to top up those stocks.

·        US base oils demand likely to extend slowdown as buyers trim stocks before year-end.

·        Demand could face less downward pressure if buyers deem any build-up of surplus supplies to be smaller than expected.

·        Demand could face more downward pressure if build-up of surplus supply is larger than expected.

·        Latin America’s base oils demand for overseas supplies likely to ebb amid weaker lube consumption, sufficient supply and expectations of lower prices.

·        Latin America’s base oils demand for US supplies could get support from more competitive prices compared with other regions.