Global base oils margins outlook: Week of 15 April

·        Global base oils prices mostly improve vs feedstock/competing fuel prices, face ongoing pressure from high crude oil prices.

·        FOB NE Asia Group II base oils price premium to regional gasoil prices holds firm, especially for heavy grades.

·        Group II premium stays well below year-earlier levels, curbing incentive for refiners to boost output.

·        FOB Asia Group I base oils premium to gasoil hold firm, mostly in narrow range since early Nov 2023.

·        Firm premium incentivizes refiners to maintain steady-to-high output levels despite completion of plant maintenance work in southeast Asia.

·        China’s domestic Group II light-grade premium to Shandong diesel prices edges lower.

·        Premium holds in narrow range so far this year, contrasts with surge in premium in April 2023.

·        Lower premium curbs incentive for domestic refiners to boost output.

·        CFR India N70 premium to Singapore gasoil prices holds steady in narrow range since early Dec 2023.

·        Steady premium provides sufficient incentive for Asia’s refiners to offer supplies for export rather than redirect them back into diesel pool.

·        Europe’s Group I domestic price premium to VGO improves, outpacing more muted rise in Group II premium to VGO.

·        Group II light/heavy-grade premium to VGO holds close to lowest in almost six months and well below year-earlier levels.

·        Lower premium curbs incentive for sharp rise in regional Group II base oils output.

·        Europe’s Group III 4cSt (low) price premium to VGO holds close to lowest since Q2 2022.

·        US Group II export price premium to heating oil/VGO extends rebound since mid-March 2024.

·        US Group II heavy-grade export price premium to VGO stays unusually weak even after recent recovery.

·        US Group II heavy-grade domestic price premium to VGO continues to trend lower, slipping to lowest since Q2 2022.

·        Lower Group II heavy-grade premium erodes counterbalance vs weak domestic light-grade premium to VGO.

·        US Group III 4cSt premium to VGO extends slide to lowest since Q2 2021.

·        US Group II light-grade posted price premium to Group II domestic spot prices widens even more.

·        Size of disconnect between posted prices and domestic spot prices is unusually large.