· Global base oils margins rise in response to increasingly lower crude oil prices.· Mostly-steady outright prices magnify impact of lower crude oil prices.· Firmer margins and steady outright prices point to stronger-than-usual fundamentals for the time of year.· Firmer margins incentivize refiners to maintain or raise output.· Such a move would increase importance of demand holding at levels that are able to absorb steady or higher supply.· Any signs of demand struggling to keep pace with steady or higher supply could trigger rise in surplus volumes. · FOB Asia Group II base oils price-premium to Singapore gasoil rebounds, especially for light grades..· Group II base oils price-premium rebounds mostly because of lower crude oil prices.· Any signs of base oils price-premiums holding onto recent gains would point to firmer supply-demand fundamentals, incentivizing refiners to maintain higher output..· Price-differentials pointing to firmer supply-demand fundamentals would coincide with time of year when demand typically begins to wane and supply shows signs of rising.· China’s domestic Group II N150 price-premium to Shandong diesel prices rebounds to highest in five months..· Firm, then rebounding N150 price-premium contrasts with sliding price-differentials the same time a year earlier.· Group II N150 price-premium to diesel rises even with higher base oils output in China in Aug-Sept 2025 and seasonal slowdown in demand in Q4 2025.· Rising price-premium suggests supply-demand fundamentals are stronger than usual for time of year.· CFR India Group II N70 price-premium rebounds to highest since May 2025..· Supply fundamentals in May 2025 were tight because of widespread round of plant-maintenance throughout Asia.· Those tight fundamentals contrast with improving supply in Q3 2025 and lighter round of plant-maintenance work in Q4 2025.· High CFR India N70 price-premium and improving supply suggests demand is key factor supporting higher price-differentials.· Any signs of steady rather than strong demand fundamentals could erode key support for more elevated N70 price-premium.· Concern about mismatch between supply-demand fundamentals and high N70 price-premium could incentivize buyers to hold back, further squeezing key support from demand fundamentals.· Europe’s domestic Group I heavy-neutrals price-premium to fuel oil stays weak, while Group II heavy-neutrals premium stays firm..· Weak domestic Group I SN 500 price-premium points to weaker heavy-grade fundamentals, incentivizes refiners to consider adjusting output.· Weak domestic SN 500 price-premium contrasts with firm Group II domestic N500/600 price-premium to fuel oil.· Diverging price trends suggest weakness in heavy-grade fundamentals reflects Group I supplies rather than all base oils grades.· Weak domestic SN 500 price-premium contrasts with still-firm SN 500 export-price premium to fuel oil.· Diverging price-trends add to complication of determining relative strength of Group I heavy neutrals and any moves by refiners to respond to those price signals.· US Group II light-grade export price-premium to vacuum gasoil (VGO) rises to highest in more than three months..· Domestic Group II light-grade price premium to VGO also rises, but less strongly.· Rangebound domestic light-grade price-premium and firmer export price-premium incentivize refiners to maintain or raise base oils output.· Export light-grade price-premium rises at time of year when it typically falls in response to rising surplus supply.· Firmer export price-premium, especially relative to domestic price-differentials, points to relative lack of any such pressure from surplus supply..Asia base oils demand outlook: Week of 20 October.Asia base oils supply outlook: Week of 20 October.Base Oil News stories and analysis also available on ICIS platform
