Global base oils margins outlook: Week of 26 May

·         Global base oils prices mostly hold firm vs feedstock/gasoil prices.

·         Firm margins in Asia and Europe point to still-tight supply-demand fundamentals, incentivizing refiners to maintain high output levels.

·         Weaker margins in US point to diverging fundamentals compared with other regions.

·         FOB Asia base oils values hold at elevated levels vs Singapore gasoil, especially for heavy grades.

·         FOB Asia Group I price-premium to gasoil stays firm, well above year-earlier levels for all grades.

·         Firm Group I margins contrast with Group II premiums to gasoil that remain firm but hold closer to lower end of recent range.

·         Firmer Group I margins add to signs of diverging supply-demand fundamentals for Group I and Group II base oils.

·         China’s domestic Group II N150 premium to Shandong diesel prices extends fall to lowest in a month.

·         Lower premium coincides with dip in base oils premium to diesel the same time a year ago.

·         Lower premium coincides with completion of key plant maintenance work in China.

·         Lower premium points to more mixed signals over outlook for prices and supply-demand fundamentals.

·         CFR India Group II N70 premium to Singapore gasoil edges up, holds at higher end of price-range over past two years.

·         High premium points to firm supply-demand factors supporting sustained strength.

·         Premium stays high even after completion of Group II plant maintenance in South Korea.

·         Premium stays high even ahead of typical seasonal slowdown in India’s lube consumption during monsoon season.

·         High premium suggests that other factors are supporting price-strength that sustains attraction of moving more very-light grade base oils to India.

·         Europe’s Group III 4cSt (low) price premium to vacuum gasoil rises to six-month high.

·         Group III 4cSt premium to VGO rises more strongly than Group I and Group II base oils premium and more strongly than Group III prices in other regions.

·         Relative strength of Europe Group III 4cSt price premium points to firmer supply-demand fundamentals compared with other grades and other regions.

·         US Group II heavy-grade export price premium to VGO falls less sharply than heavy-grade domestic premium to VGO, after both grades’ margins peaked at six-month high in early-May 2025.

·         More rangebound export price-premium points to firmer supply-demand fundamentals for export volumes than for supplies in the domestic market.

·         Dynamic points to still-firm overseas demand and more mute domestic demand for Group II heavy grades.