· Crude oil prices reverse all their gains from 2H Jan 2024, revert to more typical range since early Dec 2023.· Fall in crude oil prices adds to base oil buyers’ preference to hold back even if crude prices rise.· Diesel prices fall more slowly, boosting their premium to crude oil to three-month high.· Higher diesel premium to crude oil incentivizes refiners to produce more middle distillates.· Global base oils demand set to rise in coming weeks to meet seasonal rise in lube consumption.· Lower crude oil prices and expectations of sufficient supplies curb buyers’ urgency to build larger stocks.· Buyers’ preference to limit procurement keeps pressure on prices, prompts refiners to clear surplus volumes.· Trend could leave refiners with smaller surplus to meet any rise in demand when seasonal pick-up in consumption materializes.· Asia’s base oils demand gets support from prospect of seasonal rise in lube demand, tighter supply and expectations that prices are likely to hold firm or rise.· China’s base oils demand set to slow down over coming weeks during lunar new year holidays.· India’s base oils demand could get support from concern about tighter supplies from Mideast Gulf and more limited Group I availability in Asia.· Europe’s base oils market faces prospect of seasonal rise in lube demand in coming months.· Blenders’ urgency to replenish stocks is more muted than in Asia amid expectations of sufficient supply.· Expectations of sufficient supply give blenders the leverage to maintain lower inventories.· Blenders’ lower inventories mean they need to replenish those inventories more frequently.· Demand for Europe’s surplus supplies of Group I base oils could get support amid tighter availability in Asia.· Domestic US base oils demand could stay more muted amid expectations of healthy availability and as prices hold firm.· US domestic spot price discount to posted prices stays unusually wide.· Wide price-gap could incentivize blenders to procure sufficient volumes to cover immediate requirements rather than to build larger inventories ahead of the spring oil-change season.· Latin Americas’ base oils demand faces pressure from slowdown in finished lube consumption.· Demand for US supplies could get support from a lack of alternative supply options from other regions..Global base oils - week of Feb 5: Price outlook - margins.Global base oils - week of Feb 5: Price outlook - arbitrage
