Global base oils - week Jun 27: Demand

· Crude prices fall on expectations recession/economic slowdown will curb fuel demand.

· Lower crude prices/expectations of economic slowdown feed expectations of lower base oils demand, boost resistance to higher prices.

· Expectations of lower demand/prices incentivize buyers to hold back, curbing buying interest.

· Global economic signals highlight slowdown is gathering pace.

· Rising interest rates add to rising costs/squeeze on consumers.

· US’ June Purchasing Managers’ output index falls to five-month low.

· US June consumer sentiment falls to record low.

· US car travel expected to hit record high in five days to 4 July, even with high fuel prices.

· US lube demand likely to get support from strong current economic/travel activity.

· US base oils demand likely to get support from tight supply, concern about supply disruption during hurricane season.

· Americas lube demand likely to face pressure as economies grow at slower pace.

· Steady lube demand, balanced supplies likely to curb Americas buyers’ urgency to procure more supplies.

· EU consumer confidence falls close to lowest since April 2020, when lockdowns began.

· Germany’s business confidence softens in June amid concern about rising energy costs, prospect of gas shortages.

· UK consumer confidence falls to record low in June as rising costs squeeze wages.

· Italy’s consumer confidence falls to lowest since November 2020.

· Lube demand shows more signs of slowing in most of Europe’s largest markets.

· Waning lube demand complicates moves to pass on higher feedstock costs.

· Slower lube demand means feedstock supplies last longer.

· European base oil demand likely to face pressure amid slower lube demand, expectations that demand will face more pressure during summer months, and expectations of easing supply tightness.

· Some Asia-Pacific economies likely to get boost from post-lockdown re-opening.

· Some Asia countries hold of raising interest rates / raise more slowly than Europe/US amid more muted inflationary pressures.

· China’s car sales growth gathers pace throughout June, with demand well above year-earlier levels.

· Asia-Pacific lube demand shows signs of holding firmer than European lube demand.

· Recovery in Chinese demand for overseas base oil supplies stays muted.

· Indian base oils demand likely to be muted as lower crude prices, sufficient supplies deter buyers.

· Monsoon season curbs further any urgency among Indian buyers to seek more supplies.

· Indian retail diesel premium to light-grade base oils stays unusually narrow.

· Narrow premium typically coincides with weaker demand for very light grade base oils.

· Perception of steady/sufficient base oils supply in Asia-Pacific curbs competition between buyers / urgency to lock in supplies.