Global base oils - week of May 8: Demand outlook

·        Crude oil prices slide over past week as concern about global economic slowdown outweighs expectations of tightening crude oil supply.

·        Diesel premium to crude steadies at lowest since early 2022, raising prospect of refiners trimming crude oil requirements.

·        Falling crude prices add to lubricant blenders’ reluctance to build stocks even amid signs of smaller supply surplus.

·        Falling crude prices raise concern about further base oils price corrections, incentivizing buyers to hold back.

·        Major global lube blenders’ firmer Q1 profit vs Q4 reflects impact of price-increases and higher sales volumes.

·        Trend likely to extend into Q2 2023.

·        Trend suggests major global blenders were able to mitigate impact of slowdown in Q1 lube demand.

·        Blenders remain more comfortable with risk of procuring smaller volumes more regularly than of building stocks to guarantee security of supply.

·        Prospect of seasonal rise in lube demand in Europe, and blenders’ already-low stocks, could complicate the strategy.

·        Strategy may be more feasible in Americas, even with prospect of later-than-usual rise in demand, amid ongoing supply surplus.

·     Strategy may be more feasible in Asia, which faces prospect of slowdown in lube demand.