· Diesel prices hold firm vs crude oil at elevated levels vs pre-Feb 2022 levels.· Slump in outright crude and diesel prices and so-far steady-to-higher base oils prices could prompt refiners to produce more base oils – despite still-muted demand in US and Europe.· India’s retail diesel premium to crude oil surges. Retail diesel price was last changed in May 2022, when crude prices were above $110/bl.· China’s Shandong diesel premium to crude oil rises close to highest in more than three months..· US base oils plant maintenance caps supply in recent weeks; supply set to rise as maintenance draws to a close in coming weeks.· Rising US base oils exports to Latin America in January help to clear supply-build at end-2022.· US exports will need to stay high if seasonal pick-up in domestic demand fails to kick in soon. · Americas’ base oils supply rises to five-month high in December – highlighting speed of supply-build in response to weak demand.· Americas’ 2022 supply barely exceeds levels in 2020, highlighting size of fall in output last year..· Extension of slowdown in supply in 2023 would facilitate arbitrage opportunities to Americas from regions like Europe, Russia, Mideast Gulf and Asia.· Rise in US supply in 2023 would complicate those arbitrage opportunities, add to competition for markets like Nigeria and India.· Europe’s base oils supply falls in December at faster pace than regional lube demand for eleventh time in twelfth month..· Europe’s Group I supply could tighten faster than expected when demand revives amid signs base oils demand has been weaker than lube demand.· Europe’s base oils imports from Russia show signs of extending into start of this year – suggesting stock-building ahead of EU ban on Russian shipments from start of February.· Any stock-building would delay for longer the supply impact of the ban.· Europe’s Group III base oils supplies from Mideast Gulf slump at start of the year, far outpacing seasonally weaker demand.· Europe’s Group III supply from Mideast Gulf and other markets show signs of improving since then.· Asia-Pacific base oils exports typically fall in February from January as firmer demand curbs refiners’ urgency to clear surplus supplies.· Asia-Pacific base oils exports show signs of rising in February from January as refiners raise output.· Strength of Chinese demand set to be key factor determining region’s ability to absorb rising exports.· Asia-Pacific base oils supply rises to nine-month high in January, likely to ease in following months as maintenance work cuts output.· Taiwan’s base oils exports to India pause in February, rise in March.· Trend highlights more intermittent flows from Taiwan to India as more supplies move to China. Pattern likely to continue.· South Korea’s February base oils exports rise to three-year high as shipments to China surge..· Rise in shipments points to firmer Chinese demand.· Rise in shipments and firmer Chinese demand likely also reflects low domestic base oils production in China.· A recovery in China’s domestic production would cut demand for regional supplies.· South Korea’s rise in shipments to southeast Asia points to sufficient supply even with revival in Chinese demand.· South Korea's shipment of large volumes to growing number of outlets in southeast Asia provides valuable hedge against demand weakness in any one of those outlets.· Fall in South Korea’s base oils exports to India suggest refiners have leverage to target markets with higher prices.· Open arbitrage facilitates shipment of large volume of Asia-Pacific Group II base oils to Europe in February.· Supplies from Asia add to Europe’s Group II base oils supply surplus.· Arbitrage flows from Asia to Europe likely to slow or halt in March as lower Europe prices curb attraction of arb shipments.· More limited arbitrage opportunities for Asia producers add to importance of firm regional demand to absorb supplies.· Singapore’s base oils exports stay unusually high last week for a second week amid wave of shipments to China and India..· Singapore’s four-week average base oils exports rise last week to highest in more than a year on sustained surge in shipments.· Singapore’s four-week average shipments to China rise to highest since before 2020.· Singapore’s four-week average base oil exports to SE Asia rise to three-month high.· Singapore’s simultaneous rise in exports to China, SE Asia and India suggest rise in production.· Singapore takes delivery of more than 9,000t of base oils from China in past three weeks – vs typical monthly volumes of less than 5,700t over past six months.· China’s shipments to Singapore rise even as domestic demand rises..Global base oils – week of March 20: Demand outlook