Global base oils margins outlook: Week of 19 Aug

·        Global base oils values stay unusually firm relative to feedstock/competing fuel prices, especially for the time of year.

·        Weaker diesel premium to crude oil contrasts with and magnifies strength of base oils margins.

·        Firm margins sustain incentive for refiners to maximize base oils output.

·        FOB Asia Group I/II price premium to Singapore gasoil prices holds firm even after edging lower following sustained rise since early July 2024.

·        Firm base oils values trend higher during Q3 2024, contrast with sliding values in Q3 2022 and Q3 2023.

·        Firm base oils values contrast with weaker gasoil premium to crude, magnifying strength of firm base oils values.

·        China’s domestic Group II light-grade base oils price premium to Shandong diesel price steadies, remains in narrow range since early June 2024.

·        Steady premium contrasts with slumping premium to much lower levels during Q3 2023.

·        Steady premium points to more balanced supply-demand fundamentals so far in Q3 2024 compared with same time last year.

·        CFR India Group II N70 premium to Singapore gasoil prices holds firm even as it edges down for first time since early July 2024.

·        Firm premium keeps arbitrage to India open, sustains incentive for refiners to produce more very-light grade base oils.

·        Firm N70 premium contrasts with discount to Singapore gasoil the same time a year earlier.

·        Dynamic points to tighter supply-demand fundamentals compared with year-earlier levels.

·        Europe’s Group I domestic price premium to VGO edges lower, remains close to highest in more than a year.

·        Europe’s Group I export price premium to VGO edges lower, holds close to highest since end-2022.

·        High base oils values point to tight supply-demand fundamentals at a time of year when market often sees build-up of surplus supply. 

·        Europe Group III 4cSt (low) premium to VGO edges down, holds well above two-year low in early July 2024.

·        Europe Group III 4cSt (low) premium to VGO stays far down from unusually high levels in Q1 2023, stays well above levels before early 2021.

·        Still-firm premium relative to levels before 2021 could curb incentive for refiners to adjust production in response to slide in premium over past year.

·        Europe’s Group II light-grade price premium to VGO maintains unusually similar level to US Group II premium to VGO since end-June 2024.

·        US Group II light-grade premium to VGO gets support from tight supply-demand fundamentals during Atlantic hurricane season.

·        Europe’s Group II light-grade premium to VGO holds firm despite signs of healthy availability of supply.

·        US Group III 4cSt price premium to VGO extends fall to lowest since beginning of 2021.

·        Sliding 4cSt premium contrasts with firm Group II N100 premium, narrowing sharply the spread between the two grades.