Global base oils demand outlook: Week of 8 July

·        Crude oil prices hold close to highest in more than two months amid expectations and signs of firm summer-related fuel demand and tighter supplies.

·        Premium of gasoil over crude stays well above recent lows in April-May 2024, well below lows before April 2024.

·        Global base oils demand could ease ahead of typical seasonal slowdown in lube consumption in month of August.

·        Global demand could get support from signs of smaller base oils supply overhang at start of Q3 2024.

·        Global demand could start to get support in some markets from moves to lock in supplies for delivery at end-Q3 2024.

·        Global demand could get support from concern about weather-related supply disruptions in US.

·        Unusually active start to Atlantic hurricane season adds to such concerns.

·        Any supply disruptions would have direct repercussions on US market and indirect repercussions on markets for which US is a key supplier.

·        Asia’s base oils demand could start to revive in coming weeks as buyers turn focus to seasonal pick-up in demand at end-Q3 2024.

·        Base oil prices in China and India continue to strengthen relative to FOB Asia prices, pointing to gradual improvement in demand prospects.

·        Europe’s base oils demand faces seasonal slowdown in coming weeks.

·        Slowdown shows signs of impacting premium-grade base oils more than Group I base oils.

·        US base oils demand could get boost from blenders’ moves to build larger stocks as buffer against weather-related supply disruptions. 

·        Blenders’ moves to build larger stocks could take longer than expected amid signs of firmer lube consumption in recent weeks.

·        Buyers in Latin America could start to eye shipments from alternative supply sources like Asia as hedge against weather-related disruption to US supplies.