· Global base oils margins fall as feedstock/competing fuel prices surge.· Sharp fall in base oils margins reflect impact of higher crude/diesel prices rather than any sudden change in base oils supply-demand fundamentals.· Fall in base oils margins comes at a time of year when supply-demand fundamentals are already starting to face downward pressure.· Any extension of margins weakness would add to signs of softening supply-demand fundamentals that are insufficient to support rise in outright prices..· FOB Asia base oils price-premium to Singapore gasoil price falls sharply..· Falling price-premium mirrors similar trend in June 2024, when margins subsequently recovered from early-July 2024.· Falling price-differentials leave light-grade prices at increasingly narrow premium to gasoil.· Any extension of that trend would incentivize refiners to cut base oils output.· Any extension of that trend would point to increasingly weak supply-demand fundamentals.· Outright prices could face upward pressure to support firmer margins if supply-demand fundamentals are less weak than current margins suggest..· Domestic China Group II N150 premium to Shandong diesel price extends slide to lowest in more than three months.· Domestic China N500 premium to diesel falls to lowest in more than seven months..· Any extension of base oils premium holding at lower levels or falling further would point to increasingly weak supply-demand fundamentals.· Any extension of base oils premium-weakness would increase incentive for refiners to cut output and produce more diesel instead..· CFR India Group II N70 premium to Singapore gasoil falls to lowest in more than four months and by more than $100/tonne since early-May 2025..· Sharp fall in N70 premium contrasts with still-wide CFR N70 discount to India’s domestic diesel prices.· Wide N70 discount to domestic diesel prices could support ongoing buying interest for very-light-grade base oils.· Sharp fall in N70 premium to Singapore gasoil cuts attraction of moving arbitrage shipments from Asia to India.· Any extension of trend could incentivize refiners to produce more diesel instead of very-light-grade base oils.· Dynamic raises prospect of drop in supply combined with still-firm demand..· Europe’s Group I/II light-grade price premium to vacuum gasoil (VGO) falls even before surge in crude oil prices from end of last week..· Lower price-differentials follow more rangebound price-premium to VGO for light and heavy grades in May 2025.· Steady, then lower-price premium could reflect supply-demand fundamentals tightness peaking in recent weeks, and prospect of easing tightness in coming weeks.· Any signs of easing supply tightness could complicate any moves by refiners or distributors to adjust prices in response to squeezed margins.· Refiners likely to have more leverage to support firmer margins for supplies that continue to face tighter availability. .· US Group II base oils price-premium to VGO likely to fall after holding in narrow range over last two months..· Even with drop in price differentials, Group II premium to VGO would remain in relatively narrow range that it has held in since beginning of 2025.· Narrow price-premium range contrasts with slump then surge in price premium in H1 2024.· Steadier price premium, at relatively firm level, points to more balanced supply-demand fundamentals this year compared with H1 2024.· Steadier price-premium at relatively firm level could curb any immediate upward pressure on outright prices unless crude prices extend their recent strong gains..Asia base oils demand outlook: Week of 16 June.Asia base oils supply outlook: Week of 16 June.Base Oil News stories and analyses also available on the ICIS platform
