Global base oils margins outlook: Week of 25 August

·         Global base oils prices hold at levels versus feedstock and competing fuel prices that sustain incentive for refiners to maintain or raise output.

·         Margins hold firm even at time of year when surplus supply typically starts to build amid seasonal slowdown in demand.

·         Firm margins could point to supply-demand fundamentals that are tighter than usual for time of year.

·         Firm margins, combined with supply-demand fundamentals that are more typical for time of year, could alternatively trigger larger rise in surplus supply.

·         FOB Asia base oils cargo price-premium to Singapore gasoil holds firm.

·         Firm price-premium points to still-tight supply-demand fundamentals even after completion of most plant-maintenance work and signs of improving surplus supply.

·         Firm price-premium incentivizes refiners to maintain or raise output.

·         Firm price-premium and any such moves to maintain higher output increase importance of strong demand to absorb the supplies.

·         Firm price-premium and demand that is insufficient to absorb the supplies could speed up rise in surplus volumes.

·         Domestic China Group II N150 price-premium to Shandong diesel extends rise since early-Aug 2025, after staying unusually low in July 2025.

·         Higher margins coincide with time of year when demand typically gets boost ahead of seasonal pick-up in consumption at end-Q3.

·         Margins show signs of staying weaker than usual for some products like Group II light grades and firm for other products like Group I and Group II heavy grades.

·         Any extension of dynamic could point to more mixed fundamentals, depending on the base oils grade.

·         CFR India Group II N70 price-premium to Singapore gasoil stays high even as it edges lower after recent surge over past month.

·         Firm N70 price-premium points to strong demand.

·         Firm N70 price-premium facilitates arbitrage to move more supplies to India, incentivizes Asia refiners to produce more very-light-grade base oils.

·         Europe Group II N150 price holds firm vs vacuum gasoil (VGO).

·         Strength of Group II price-premium contrasts with weaker price-premium to VGO for Group I light grades, which face pressure from growing surplus supply.

·         Firm price-premium for Group II light grades points to more balanced fundamentals for those supplies.

·         Any extension of trend, combined with weaker Group I price-premium, could suggest blenders are procuring more Group II supplies, compounding surplus of Group I base oils.

·         US Group II base oils price-premium to VGO holds firm in narrow range for domestic and export prices.

·         Price-premium stays in relatively narrow range since late-2024.

·         Rangebound price-premium contrasts with much more volatile margins in recent years.

·         Rangebound price-premium points to more balanced supply-demand fundamentals since late last year.

·         Price-premium holds in narrow range even after completion of plant-maintenance work and with seasonal slowdown in demand.

·         Rangebound price-premium incentivizes refiners to maintain high output levels.