Global base oils margins outlook: Week of April 8

·        US and Europe domestic base oils prices stay under pressure vs feedstock/competing fuel prices.

·        Trend maintains pressure on refiners to raise prices or trim supply.

·        US and Europe export prices extend rise vs feedstock/competing fuel prices, cushioning impact of weak domestic margins in US especially.

·        Asia’s base oils prices mostly hold relatively firm versus regional gasoil prices even as they edge lower.

·        FOB NE Asia Group II N500 price premium to gasoil holds close to highest since June 2023, but well below year-earlier levels.

·        FOB NE Asia Group II N150 price premium to gasoil stays relatively low and much lower than year-earlier levels.

·        Lower premiums vs year-earlier levels, especially for light grades, curbs attraction for refiners to raise output.

·        China’s domestic Group II N150 price premium to Shandong diesel prices holds steady, around same level as at start of 2024 but well below year-earlier levels.

·        Premium holds at levels that point to relatively balanced supply-demand dynamics, curb risk of major supply-build.

·        CFR India N70 premium to Singapore gasoil prices falls, holds in $100-150/tonne range since early Dec 2023.

·        Premium stays at levels that sustain incentive for refiners to maintain output of the product rather than redirect it back into the diesel pool.

·        Europe’s domestic Group I prices stay unusually weak vs gasoil and VGO prices even with rise in outright prices.

·        Europe’s Group II light-grade price premium to VGO extends fall to lowest since Oct 2023.

·        Europe’s Group III 4cSt (low) price premium to VGO holds close to lowest since June 2022.

·        Sustained price weakness of Group I, Group II and Group III base oils points to weak supply-demand fundamentals, deters refiners from increasing supply.

·        Europe’s Group I export price premium to VGO extends rebound to highest since start of 2024, contrasting with relative weakness of Group I domestic prices.

·        US domestic base oils prices extend fall vs heating oil/VGO even as outright prices rise.

·        US domestic Group II light-grade price premium to VGO falls to lowest since March 2022.

·        US domestic Group III 4cSt premium to VGO slumps to lowest since March 2021.

·        Sliding price premiums curb incentive for refiners to maintain or raise current output levels.

·        US Group II posted price premium to VGO stays under pressure at lowest since Sept 2023 even after recent round of price-increases.

·        Ongoing pressure on margins could prompt refiners to adjust prices again if crude/VGO prices hold onto recent gains.

·        US Group II export price premium to heating oil/VGO extends rise, mirroring similar trend in Europe.

·        US’ growing volume of exports as share of total supply increases impact of rising margins for base oil exports.