Global base oils – week of Oct 24: Supply outlook

·        Diesel premium to crude stays unusually high, maintaining incentive for refiners to maximise middle distillates production.

·        India’s retail diesel premium to crude stays low, reflecting unchanged diesel price since May.

·        China Shandong diesel premium to crude dips from recent highs, still at high end of one-year trend.

·        US diesel stocks fall in October close to April lows, which were lowest since 2005.

·        Europe diesel supply faces uncertainty with EU ban on Russian crude imports set to begin in early December.

·        US, Japan refinery run rates stay high amid high diesel margins.

·        Global base oils supply remains plentiful for now even with refiners incentivized to maximise diesel output.

·        Plant maintenance continues in US, Europe, Asia.

·        Maintenance work impacts Group II supply in US, Group III supply in Europe, Group I supply in Asia.

·        US base oils supplies held as precaution for weather-related disruptions during Atlantic hurricane season likely to add to surplus availability.

·        US supply likely to get boost as US blenders curb procurement ahead of seasonal slowdown before year-end and in anticipation of economic slowdown. 

·        Italy’s base oils output recovers in July-August following prolonged plant shutdown. But output remained lower than usual.

·        Europe/Turkey supplies from Russia hold steady/firm in August, adding to regional supply.

·        Increasingly regular flow of Russian shipments to Turkey and from Turkey to other markets adds to regional supply.

·        Surge in South Korean shipments in September likely to add to Americas/Europe October supply.

·        South Korea’s September exports to Americas/Europe rise to second-highest level in eight years.

·        Singapore’s four-week average base oils exports to China rise close to four-month high.

·        Share of Singapore’s base oils exports bound for China over past month rises to six-month high.

·        Singapore’s base oils imports from Japan in September fall to lowest since January.

·        Singapore’s September base oils imports from China in September rise to highest in more than five years.

·        Singapore’s base oils imports from Japan surge over past week to highest since May.

·        Frequency rises of shipments from Saudi Arabia to Singapore.

·        Steady flow of Chinese shipments continues to move to Singapore.

·        Chinese shipments to SE Asia/India remain high in September even amid pick-up in domestic demand.

·        Chinese supply could rise further as rebounding domestic China base oils premium to diesel incentivize more production.

·        Pace of base oil shipments from Taiwan slows in October vs September.