Global base oils - week of May 29: Price outlook - margins

·        Europe’s Group I base oils price premium to diesel edges down, holds firm close to highest since last August.

·        Europe’s Group II premium to diesel holds close to highest since last September.

·        Base oil premium to diesel stays much lower than year-earlier levels.

·        Diesel premium to crude also much lower than year-earlier levels.

·        Firm base oil premium to diesel, and weaker diesel premium to crude, boosts incentive for refiners to produce more base oils.

·        Asia’s Group I base oils premium to gasoil continues to edge down from more than 16-month high in early May.

·        Asia Group II base oils premium to gasoil follows similar trend.

·        Base oils premium to gasoil stays unusually high, up more than $270/t since 2H January.

·        China’s domestic Group II light-grade premium to Shandong diesel extends fall to lowest in almost two months.

·        Group II premium to Shandong diesel stays close to highest levels over last two years.

·        High premium to diesel incentivizes refiners to raise production, gives them leverage to trim prices and still maintain firm margins.

·        US Group II price premium to diesel weakens, holds firm vs Feb-March levels.