· Crude oil prices fall on slowing economic growth, rising interest rates that may have to rise higher for longer.· Lube blenders’ squeezed Q4 margins highlight weakness of end-user demand and buyers’ resistance to higher prices.· Refiners’ base oils margins face less pressure even as end-users resist higher prices.· US central bank likely to raise interest rates again in March amid increasingly mixed growth signals - US labour market stays unexpectedly strong in January even as manufacturing activity contracts and inflation slows.· US gasoline demand falls last week for 44th week, but contraction slows sharply..· US’ November base oils/lube demand holds firm. Trend contrasts with low domestic base oils production, limiting size of supply-build at year-end..· US’ January automobile sales rise for sixth month, at slowest pace in five months.· Argentina’s November lube demand falls year on year for second month.· Pace of contraction slows sharply while demand rises strongly from October.· More muted slowdown mirrors trend in Brazil amid signs of relatively steady consumption in Latin America’s largest markets at end-2022.· Weaker lube demand boosts incentive for Latin American blenders to procure smaller volumes more regularly from domestic/regional suppliers.· Move reduces exposure to risk of significant change in price or demand between purchase and delivery of supplies.· Trend curbs further the attraction of arbitrage shipments from Asia-Pacific.· Brazil’s more balanced supply at end-2022 raises prospect of steady demand for overseas supplies in early 2023..· European central bank likely to raise interest rates by another 0.5pc in March amid still-high core inflation.· Europe’s economy avoids recession in Q4 2022. But growth set to remain sluggish on weak domestic demand and high interest rates.· France’s January car sales extend strong rise since last August.· EU’s ban on Russian base oils imports comes into effect from 5 February, forcing regional buyers to cover requirements from other sources.· Germany’s domestic lube demand shows signs of holding firm in final months of 2022.· Weak lube demand in other European markets in late-2022 and early this year deters blenders from seeking to replenish stocks.· Lube demand typically sees seasonal boost from late Q1 each year irrespective of economic growth.· Delayed moves to replenish stocks likely to add to pick-up in base oils demand ahead of seasonal rise in lube consumption.· Sustained pressure on Nigeria’s currency keeps adding to costs and to complication of lining up base oil shipments to the country.· China’s manufacturing and especially non-manufacturing PMI rebounds in January, pointing to healthy pick-up in consumption during lunar new year holiday period.· China’s January car sales fall for third month, likely dip at sharpest pace in at least nine months as lunar new year holidays, removal of electric vehicle tax incentives cut demand.· Chinese blenders have increasingly narrow window to replenish stocks ahead of spring oil-change season.· China’s rebounding domestic Group II base oils prices highlight mismatch between demand and supply.· Japan’s firm base oils/lube demand in December highlights support from PCMO consumption, cushioning weakness of industrial oils..· Asia-Pacific PCMO demand likely to get support from rebound in number of Chinese tourists, boosting services activity.· Thailand and Vietnam’s falling base oils imports in Q4 2022 highlight impact of slowing global economic growth. Rebounding tourism sectors likely to provide support.· Thailand’s lube demand falls in December, reflecting larger impact of global economic slowdown. Other markets like India more insulated from global slowdown.· India’s base oils buyers will need to rely increasingly on domestic suppliers at current price levels as more Asia-Pacific supplies target other markets.· Indian demand for very-light grade base oils could get a boost as retail diesel premium to regional base oil prices holds close to widest since early 2022.· Prospect of rising regional prices for very light grades in response to tighter supply could add to Indian buying interest, to lock in supply at current price levels..Global base oils - week of Jan 30: Supply outlook
