· Crude oil prices rebound over past week on growing confidence about strength of China's economic recovery, and moves by Russia to cut crude oil output from March.· Preliminary US consumer sentiment for February rises to 13-month high, adding to signs of healthier-than-expected economic activity even in face of high interest rates.· Firm economic growth and inflation expectations suggest interest rates to stay higher for longer.· US gasoline demand falls last week for 45th week..· US base oils demand likely to get support after last month’s posted price-cut eases concern about exposure to lower prices. Firmer crude prices, plant maintenance work, add further support.· Sharp slowdown in arbitrage flows to US/Americas from Asia cut supply/competition in US from other regions.· Automobile sales grow more slowly or contract in January in key Latin American markets..· Latin America’s base oils demand likely to hold steady as more balanced supplies at start of year remove need to work down stocks.· Improving sentiment about economic prospects in Europe contrast with slump in Germany’s industrial output at end-2022, especially in energy-intensive sector.· Germany’s domestic and export lube demand, and lube production, extend slide in Q4 2022.· Lower lube production in Europe and delayed stock-building cuts blenders’ exposure to risk of even weaker demand.· Weak lube demand in Europe may lag an even steeper drop in base oils supply in or to the region amid sharp slowdown in availability from US and Asia-Pacific at end-2022..· Delayed stock-building leaves blenders exposed to possibility of tight supply if demand exceeds expectations or seasonal demand picks up.· Turkey’s Group I base oils imports from Russia surge in 2022 amid competitive prices, show signs of plateauing in final months of year.· Trend suggests Russian refiners will need to seek additional alternative outlets to absorb more of their supplies in 2023.· Asia-Pacific base oils demand likely to rise over coming weeks as seasonal rise in consumption, reviving Chinese demand, confidence prices have bottomed out and plant maintenance incentivize buyers to lock in supplies.· Buyers’ expectation that regional supplies remain sufficient caps strength of pick-up in demand.· China’s base oils demand likely to get boost as industrial activity resumes after lunar new year holidays, and after blenders held off replenishing stocks ahead of spring oil-change season.· China’s January car sales fall sharply because of lunar new year holidays and as buyers bring forward purchases to end-2022 ahead of removal of tax subsidies. Pace of contraction within expectations.· China’s January electric car sales fall more sharply than combustion-engine car sales following expiration of EV subsidies at end-2022.· China’s January automobile production falls on lunar new year effect and as manufacturers adjust output to control inventory levels.· Indonesia’s demand for overseas base oils supplies holds firm in Q4 2022 and early this year – but will face more competition for supplies this year as Chinese demand revives..· Pakistan’s lube demand falls in 2022 after rising in first half of year. Demand likely to stay weak in early 2023 amid slow economic growth, slumping auto sales and production.· India’s January car sales rise for ninth time in ten months.· India’s lubricating oil demand continues to rise strongly amid healthy economic growth, rising car sales. Trend increases need for base oils imports to make up shortfall of domestic supplies.· India’s demand for very-light grade base oils likely to get support amid wide diesel premium to light grades, expectations that premium could start to narrow..Global base oils – week of Feb 6: Supply outlook
· Crude oil prices rebound over past week on growing confidence about strength of China's economic recovery, and moves by Russia to cut crude oil output from March.· Preliminary US consumer sentiment for February rises to 13-month high, adding to signs of healthier-than-expected economic activity even in face of high interest rates.· Firm economic growth and inflation expectations suggest interest rates to stay higher for longer.· US gasoline demand falls last week for 45th week..· US base oils demand likely to get support after last month’s posted price-cut eases concern about exposure to lower prices. Firmer crude prices, plant maintenance work, add further support.· Sharp slowdown in arbitrage flows to US/Americas from Asia cut supply/competition in US from other regions.· Automobile sales grow more slowly or contract in January in key Latin American markets..· Latin America’s base oils demand likely to hold steady as more balanced supplies at start of year remove need to work down stocks.· Improving sentiment about economic prospects in Europe contrast with slump in Germany’s industrial output at end-2022, especially in energy-intensive sector.· Germany’s domestic and export lube demand, and lube production, extend slide in Q4 2022.· Lower lube production in Europe and delayed stock-building cuts blenders’ exposure to risk of even weaker demand.· Weak lube demand in Europe may lag an even steeper drop in base oils supply in or to the region amid sharp slowdown in availability from US and Asia-Pacific at end-2022..· Delayed stock-building leaves blenders exposed to possibility of tight supply if demand exceeds expectations or seasonal demand picks up.· Turkey’s Group I base oils imports from Russia surge in 2022 amid competitive prices, show signs of plateauing in final months of year.· Trend suggests Russian refiners will need to seek additional alternative outlets to absorb more of their supplies in 2023.· Asia-Pacific base oils demand likely to rise over coming weeks as seasonal rise in consumption, reviving Chinese demand, confidence prices have bottomed out and plant maintenance incentivize buyers to lock in supplies.· Buyers’ expectation that regional supplies remain sufficient caps strength of pick-up in demand.· China’s base oils demand likely to get boost as industrial activity resumes after lunar new year holidays, and after blenders held off replenishing stocks ahead of spring oil-change season.· China’s January car sales fall sharply because of lunar new year holidays and as buyers bring forward purchases to end-2022 ahead of removal of tax subsidies. Pace of contraction within expectations.· China’s January electric car sales fall more sharply than combustion-engine car sales following expiration of EV subsidies at end-2022.· China’s January automobile production falls on lunar new year effect and as manufacturers adjust output to control inventory levels.· Indonesia’s demand for overseas base oils supplies holds firm in Q4 2022 and early this year – but will face more competition for supplies this year as Chinese demand revives..· Pakistan’s lube demand falls in 2022 after rising in first half of year. Demand likely to stay weak in early 2023 amid slow economic growth, slumping auto sales and production.· India’s January car sales rise for ninth time in ten months.· India’s lubricating oil demand continues to rise strongly amid healthy economic growth, rising car sales. Trend increases need for base oils imports to make up shortfall of domestic supplies.· India’s demand for very-light grade base oils likely to get support amid wide diesel premium to light grades, expectations that premium could start to narrow..Global base oils – week of Feb 6: Supply outlook
