Global base oils margins outlook: Week of 13 May

·        Global base oils prices extend gains vs feedstock/competing fuel prices even as diesel premium to crude holds close to lowest in almost a year.

·        Firmer base oils values incentivize refiners to prioritise base oils output rather than diesel.

·        FOB NE Asia Group II light/heavy-grade price premium to Singapore gasoil extends surge to highest since Q2 2023.

·        FOB Asia Group I price premium to Singapore gasoil extends rise to highest since Q2 2023.

·        Rising premiums incentivize refiners to boost base oils output.

·        Domestic China Group II light-grade price premium to Shandong diesel prices holds in narrow range since H2 Dec 2023.

·        Steady premium contrasts with surge and then slump in base oil premium in H1 2023.

·        Steady premium at lower levels could support steady domestic base oils output.

·        CFR India N70 premium to Singapore gasoil prices edges up to highest since Nov 2023.

·        Rising premium incentivizes Asia refiners to maintain or raise base oils output.

·        Europe’s Group I brightstock export price premium to VGO extends rise to highest in almost five months, stays well above domestic price premium to VGO.

·        Europe’s Group II N150 premium to VGO stays in narrow range even as it rises to highest since mid-Jan 2024.

·        Europe’s Group III 4cSt (low) premium to VGO stays close to lowest since H1 2022 even as it recovers to highest since mid-Feb 2024.

·        US Group II domestic light-grade premium to VGO rises to highest since H1 Jan 2024.

·        US Group II domestic heavy-grade premium to VGO rises to highest since end-March 2024.

·        US Group III 4cSt base oils premium to VGO rises to highest since early-April 2024.

·        Trend reflects recent outperformance of Group II light grades vs Group II heavy grades and vs Group III prices.

·        Trend incentivizes refiners to boost output of Group II light grades rather than redirect supplies to the diesel pool.

·        US Group II light-grade posted-price premium to VGO rises to highest in close to six months.

·        US Group III 4cSt posted-price premium to VGO falls to lowest since Q2 2022.