Global base oils - week of July 10: Price outlook - arbitrage

·        Europe’s Group II prices stay wide vs US prices, widen further vs Asia prices.

·        Europe’s wide Group II price premium sustains attraction of targeting the market with surplus volumes from US and Asia.

·        Europe’s Group I price premium to Asia prices narrows further.

·        Narrowing premium increases risk of lining up arbitrage shipments from Asia/Mideast Gulf to Europe.

·        Europe’s Group I price premium stays wide, sustaining attraction for buyers in India/Mideast Gulf to target Asia cargoes instead.

·        Arbitrage to move Asia supplies to Americas stays hard to work except for Group I bright stock.

·        Discount of Asia Group II base oils to domestic China prices improves to firmest level in two months, still narrower than Q4 2022 and Q1 2023.

·        Continuation of the trend would start to make arbitrage more feasible.

·        Asia Group I price differentials vs domestic Chinese prices improves. But arbitrage stays hard to work for now.