Global base oils margins outlook: Week of 6 May

·        Global base oils prices rise vs feedstock/competing fuel prices following slide in crude/diesel prices.

·        Firmer base oils values incentivize refiners to maintain or raise output.

·        Demand fundamentals would need to be firmer to absorb any subsequent rise in supply.

·        FOB NE Asia Group II price premium to Singapore gasoil prices extends rise to highest in close to a year.

·        Widening premium adds to incentive for refiners to maintain or raise output.

·        Asia’s Group II premium to gasoil followed a similar trend in first four months of 2023, before a sharp slide that began in H1 May 2023.

·        FOB Asia Group I brightstock price premium to Singapore gasoil holds at highest in almost a year.

·        Firm Group I base oils values vs gasoil incentivize refines to boost output; any rise in supply could be more muted because of lower production capacity.

·        China’s domestic Group II light-grade price premium to Shandong diesel prices rises to highest in more than two months.

·        Rising base oils premium contrasts with falling premium the same time a year earlier.

·        Any extension of the trend could incentivize domestic refiners to maintain or raise base oils output, especially at a time when diesel values remain weak.

·        CFR India Group II N70 premium to Singapore gasoil prices holds firm close to highest in more than five months.

·        Firm premium incentivizes refiners to maintain or raise very-light grade base oils output rather than redirect supplies back into diesel pool.

·        Europe’s Group I base oils export price premium to VGO extends rise, exceeding year-earlier levels, especially for SN 150.

·        Europe’s Group I SN 150 domestic price premium to VGO climbs to highest in more than three months, rises more strongly than Group II light-grade premium.

·        US Group II export price premium to heating oil and VGO extend strong rebound.

·        Group II export light-grade premium to VGO rebounds more than $190/tonne since mid-March 2024 to five-month high.

·        Group II export heavy-grade premium to VGO rebounds more than $150/tonne since mid-March 2024 to five-month high.

·        US Group II domestic heavy-grade premium to VGO edges up from three-year low in H2 April 2024, lags pace of rise in export-price premium.

·        US Group II domestic light-grade premium to VGO surges to highest since mid-Jan 2024.

·        Rise in domestic light-grade premium outpaces rise in heavy-grade premium.

·        Rise in light-grade price premium outpaces rise in Europe and Singapore Group II price premium.