· Global crude oil prices edge down over past week, hold close to recent highs against backdrop of firmer-than-expected economic activity in US and Europe, expectations of strong recovery in China. · OPEC+ meeting this week expected to keep crude oil production levels unchanged.· US central bank likely to raise interest rates this week, cut size of increase to 0.25pc amid growing signs of economic slowdown, adding to downward pressure on inflation.· US gasoline demand falls last week for 43rd week to lowest in almost two years..· US base oils/lube demand likely to get boost on recent refinery posted price cuts, higher crude oil prices, start of plant maintenance work.· Brazil’s firmer lube demand in December 2022 raises prospect of more balanced base oils supplies at start of this year..· European central bank expected to raise interest rates by 0.50pc this week amid ongoing concern about high inflation, signs of more muted-than-expected economic slowdown.· Europe’s flash PMI for January points to return to expansion on rebound in services activity.· Germany raises 2023 economic forecast to slight growth, from 0.4pc contraction previously.· UK’s flash PMI for January falls at fastest pace in two years, pointing to likely recession.· Weak lube demand and concern of steeper slowdown incentivized European blenders to delay base oils stock replenishment.· Delayed moves to replenish inventories set to squeeze round of stock-replenishment into smaller timeframe later in Q1 2023.· Italy’s December lube demand extends slide, deterring blenders from replenishing stocks and magnifying market impact of lingering surplus base oils supplies.· UK’s November base oils/lube demand falls to lowest since 1H 2020, mirroring slowdown in other European markets..· UK’s rising consumption of premium-grade base oils means slower domestic demand has bigger impact on overseas suppliers than on domestic supplies.· Europe’s weak lube/base oils consumption contrasts with steady-to-firm demand in Latin America, Africa and southeast Asia, despite pressures on economic growth in those markets.· Base oils producers are increasingly likely to target those markets in response. · Any EU buyers that have yet to find alternative sources of Group I base oils in place of Russian supplies may struggle to cover requirements ahead of Feb 5 EU ban on Russian shipments.· China’s base oils demand falls 30pc in 2022 from previous year; December demand stays low.· China’s low demand, domestic producers’ low output and blenders’ low stocks likely to trigger even stronger pick-up in requirements during upcoming spring oil-change season.· Signs of strong revival in economic and travel activity in China during lunar new year holidays likely to add to pick-up in lube demand.· India’s December base oils output rises to highest in a decade. Rising domestic supply and competitive prices for the supplies cut demand for overseas shipments.· India’s higher base oils output lags size of fall in imports, cutting net supply and raising prospect of pick-up in demand for overseas supplies unless and until domestic capacity rises..· India’s lube demand typically peaks in March during final month of financial year. Buyers need to line up feedstock supplies well before then.· India’s demand for very-light grade base oils could get support following sustained slide in imports, and retail diesel premium to regional light-grade prices at its highest in almost a year..Global base oils - week of Jan 23: Supply outlook
