Global base oils – week of Oct 17: Demand outlook

·        Global economy faces prospect of synchronised slowdown.

·        OPEC, EIA cut oil demand forecasts for 2023 amid slowing economic growth.

·        IEA says higher oil prices following OPEC+ supply-cut cuts demand for oil, compounds pressure on economic growth.

·        Economic slowdown coincides with seasonal base oils destocking / winter slowdown in activity.

·        US September core inflation rises to 40-year high, raising prospect of more large interest-rate hikes.

·        Rising US interest rates, strong US dollar, keep pressure on other countries to raise interest rates, squeezing growth.

·        US consumer confidence edges up in early October, still unusually low.

·        US weekly gasoline demand falls in early October for 28^th straight week.

·        No Atlantic hurricanes forecast for now.

·        US lube demand typically faces seasonal slowdown during final months of year.

·        Concern about economic slowdown adds to incentive to maintain lower base oils/lube stocks.

·        US refiners/blenders that built stocks as buffer for weather-related disruptions during Atlantic hurricane season face prospect of trimming those supplies before year-end.

·        Latin American demand for US base oils likely to wane amid slower growth, sustained wave of arbitrage supplies from Asia-Pacific/Mideast Gulf.

·        Latin America’s September auto sales mostly extend rise in September.

·        Europe economic growth set to slow over coming months amid higher interest rates, surging energy costs.

·        Europe’s industrial activity holds firm through August amid improving supply chains.

·        UK economy shrinks in August, faces prospect of steep rise in interest rates.

·        European demand for Group III base oils holds firm in August even as lube consumption slows.

·        August lube demand holds steady in some European markets amid strong services/tourism sector.

·        Asia-Pacific base oils/lube demand stays mixed.

·        India’s September lube demand rises, set to hold firm over coming months during festive season.

·        India’s September base oils imports fall to 27-month low.

·        Even with good availability of domestic supplies, buyers likely to need to replenish stocks over coming months.

·        Buyers likely to replenish stocks once they are confident that falling prices have bottomed out.

·        Indian demand for very light-grade base oils likely to remain muted.

·        China’s September car sales rise 33pc year on year; commercial vehicle sales fall 12pc as truck sales slide.

·        Chinese blenders likely to continue to manage stocks carefully as China reiterates zero-Covid policy.

·        Rising prices for domestic base oils supplies in China likely to boost demand for overseas supplies.