Global base oils demand outlook - week of April 1

·        Crude oil prices extend gradual rise, holding close to highest since Oct 2023 amid signs of firmer-than-expected supply-demand fundamentals.

·        Diesel premium to crude oil falls to lowest since July 2023.

·        Disconnect between firm crude oil prices and lagging gasoil prices could impact sustainability of recent crude-price strength.

·        Base oils demand could face seasonal pick-up in Europe and US over coming weeks, and slowdown in Asia.

·        Dynamic would contrast with firmer demand in Asia and seasonally-weak demand in Europe and US in recent months.

·        Current base oils prices in the three regions reflect supply-demand trends in recent months, rather than that new dynamic.

·        Asia’s base oils demand could start to ease as seasonal dip in lube consumption curbs urgency to buy.

·        China’s demand for regional base oils supplies likely to stay muted amid cautious buying, sufficient domestic supply.

·        India’s base oils demand could start to ease as shipments from US and South Korea help to replenish stocks.

·        Europe’s higher export prices point to firmer supply-demand fundamentals for overseas market.

·        Trend could support pick-up in regional demand as buyers focus on locking in supplies that could otherwise move into the export market.

·        Higher US posted prices and export prices could raise expectations of rise in domestic prices, and subsequent pick-up in demand.

·        US export prices remain unusually weak vs domestic prices and feedstock costs even with recent rise in outright prices.

·        US posted prices remain unusually weak vs feedstock costs, pointing to still-weak supply-demand fundamentals.

·        Weak supply-demand fundamentals provide buyers with leverage to maintain low stocks.