Global base oils – week of April 24: Price outlook – margins

·        Europe’s Group I base oil premium to diesel rises to highest in more than eight months.

·        Europe’s Group II base oil premium to diesel rises to highest in more than four months.

·        Group I premium rises in response to firm outright prices and lower diesel prices.

·        Rising margins suggest demand outweighs supply, incentivize refiners to produce more base oils.

·        Sustainability of margins at current levels would confirm whether demand outweighs supply.

·        Margins may face pressure if demand matches or lags supply.

·        Asia-Pacific Group I/II base oils premium to diesel rises to highest since early August.

·        Asia-Pacific surplus supply rose sharply at that time in Q3 2023.

·        Higher Asia base oils premium to diesel coincides with round of plant maintenance work, suggests supply starting to lag demand.

·        China’s domestic Group II light-grade premium to diesel holds firm close to highest since November 2022.

·    Firm base oil premium points to stronger domestic demand, incentivizes refiners to increase output.

·        India’s domestic retail diesel premium to regional light-grade base oils prices holds steady – at levels that have failed to trigger rise in demand for overseas supplies.

·        US posted price premium to heating oil holds firm despite recent cut in outright prices.