Global base oils – week of Oct 31: Supply outlook

·        Diesel prices maintain steep premium to crude, incentivizing refiners to prioritise middle distillates production.

·        US distillates stocks hold close to lowest since 2008, supporting firm diesel margins.

·        India’s retail diesel premium to crude oil stays relatively low, incentivizes refiners to produce other products like base oils.

·        China’s Shandong province diesel premium to crude rises, holds close to highest in a year.

·        Atlantic hurricane season draws to close, less active than usual.

·        US base oils producers/blenders that had built buffer stocks in case of weather-related disruptions likely to trim those supplies.

·        Weakening European lube demand adds to seasonal slowdown in consumption, freeing up more supplies.

·        Turkey’s ongoing consumption of large volumes of Russian base oils displaces European supplies, frees up more shipments for other markets.

·        More Russian cargoes to Turkey/Mideast Gulf coincide with more Mideast Gulf cargoes to Latin America, highlighting knock-on effect of changing trade flows.

·        Plant maintenance work in US, Europe, Asia-Pacific has limited price impact, reflecting ongoing supply-demand imbalance.

·        Singapore’s four-week-average base oils exports in October fall to lowest since first-half May.

·        Singapore’s base oils exports from domestic sources fall over last four weeks to lowest since early June.

·        Singapore’s four-week average base oils exports to India stay lower in Sept-Oct than in June-August.

·        Singapore’s lower shipment volumes to China, India contrast with still-high volumes to SE Asia.

·        Singapore takes delivery of no supplies from Japan last week for second time in four weeks.

·        Singapore’s base oils imports from Japan over last four weeks account for less than 30pc of total imports, down from around 40pc share in four months to end-September.

·        China’s base oils production likely stayed low in October, boosting demand for regional supplies.

·        Any pick-up in domestic production in China would likely curb demand for regional supplies.

·        Taiwan’s October base oils exports show signs of falling sharply from September levels, up from August shipment levels.

·        India’s October base oils imports from Taiwan stay unusually high.

·        India sees sharp pick-up in shipments from Qatar in October.

·        India continues to take delivery of large volumes of very light grades from Spain in October.