· Crude oil prices stay rangebound over past week, with concern about higher interest rates for longer countering expectations of stronger Chinese crude oil demand as economy revives.· Weak base oils demand, and blenders’ expectations that supply is readily available, curb urgency to replenish stocks.· Round of stock replenishment to meet seasonal rise in demand will test those expectations.· Any pick-up in demand that exceeds expectations would further test the assumed ready availability of supplies.· US/Europe’s rising business activity for February points to firmer-than-expected economic growth in Q1 2023, adding to expectations of additional interest-rate increases.· US gasoline demand rises last week to highest in almost two months, falls year on year at slowest pace since last June..Brazil’s January lube demand rebounds, with recovery extending to industrial oils..· Lube demand rises against backdrop of balanced base oils supplies, raising prospect of steady base oils demand over coming months.· Latin America’s firm lube demand at end-2022 contrasts with falling US supplies, boosting buyers’ incentive to turn to other markets for supplies.· Eurozone’s core inflation rises to record high in January, highlighting ongoing challenge of curbing rising prices.· Europe’s economic activity exceeds expectations so far this year but remains weak, complicating blenders’ procurement plans.· Europe’s January car sales rise for sixth month; Spain’s sales surge.· Europe’s base oils demand weakness at end-2022/early 2023 outweighs refiners’ moves to cut production in markets like Italy.· Spain’s December lube demand falls even more steeply than usual, highlighting regionwide demand weakness at end-2022 and blenders' reluctance to procure base oils.· Italy’s lube demand rises in January, mirroring Europe’s firmer PMI at start of the year and suggesting demand exceeded expectations.· Italy’s lube demand rebounds in January after falling sharply in December, like Spain..· Any more widespread repetition of Italy’s January rebound in demand throughout Europe would suggest blenders worked down existing stocks rather than replenished feedstock supplies.· Turkey’s growing demand for premium-grade base oils likely to impact its ability to absorb more Group I supplies from Russia..· Europe remains Turkey’s key source for premium-grade supplies.· North Africa’s base oils imports hold steady in 2022, but buyers line up growing volume of supplies from other markets instead of Europe.· Trend reflects growing difficulty European producers likely to face clearing any surplus Group I supplies.· South Africa’s lower imports in December coincide with tighter supply in US, Netherlands at year-end.· South Africa’s base oils imports requirements face prospect of slowing this year as power outages cut economic growth.· Strength of pick-up in Asia-Pacific base oils demand linked to size of recovery in Chinese demand for overseas supplies.· China’s passenger car sales edge up slowly in first three weeks of Feb yoy and vs Jan.· China’s base oils demand shows signs of rising in February.· Plant maintenance work in China likely provides additional boost to domestic demand for overseas supplies.· But size of pick-up in demand likely smaller than expected, especially in view of blenders’ need to replenish low stocks ahead of spring oil-change season.· A smaller-than-expected rise in Chinese demand would free up more Asia-Pacific supplies for other markets.· Demand from southeast Asia likely to remain steady, but insufficient to counter any weaker-than-expected demand in China.· India’s demand for Group III base oils likely to continue to rise at least until new base oils production capacity starts up in the country.· India’s demand for very-light-grade Group II base oils could get support amid signs that prices bottomed out..Global base oils - week of Feb 20: Supply outlook
