Global base oils – week of June 19: Price outlook – margins

·        Base oils values vs diesel mostly fall amid weaker supply-demand fundamentals, hold at levels that incentivize steady-to-higher output.

·        Europe’s Group II base oils premium to diesel falls by more than $100/t since early May, holds well above Q1 2023 levels.

·        Europe’s Group I base oils premium to diesel falls, but more slowly than Group II; premium down from May, well up from Sep 2022-Apr 2023 levels.

·        Europe base oils premium holds at levels that are likely to incentivize refiners to maintain firm output.

·        Asia’s Group I base oils premium to diesel falls more steeply than in Europe, falls to lowest in more than three months.

·        Asia’s Group II base oils premium to diesel falls more steeply than Europe to two-month low.

·        Steeper fall in Asia base oils premium to diesel insinuates regional fundamentals are weaker than in Europe.

·        Domestic Chinese Group II light-grade base oils premium to Shandong diesel holds firmer, down from Feb-May 2023 levels, well up from pre-Nov 2022 levels.

·        Domestic Chinese Group II base oils premium holds firmer even amid more plentiful domestic supply, suggesting steadier demand.

·        US Group II posted price premium to diesel holds close to lowest since Jan 2023, stays relatively firm.