Global base oils - week of Aug 14: Price outlook - arbitrage

·        Europe’s Group II prices maintain steep premium to Asia/US prices – sustaining attraction of moving more arbitrage shipments to the region.

·        Europe’s Group I base oils premium to Asia prices widens further, keeping open arbitrage to move more arbitrage shipments to Europe.

·        Europe’s wide Group I base oils premium to Asia prices keeps shut arbitrage from Europe to outlets like Mideast Gulf and India.

·        Europe’s Group I base oils premium to Asia prices stays wide even at time of weaker demand fundamentals in Europe.

·        Europe’s wide Group I base oils premium to Asia prices suggests supply stays sufficiently balanced to avoid need for open arbitrage.

·        Europe’s unapproved/partially approved Group III base oils price discount to Asia prices widens further – making less attractive any arbitrage shipments to Europe.

·        Europe’s unapproved Group III price discount to Asia prices instead boosts attraction of moving more supplies to Asia.

·        Asia Group I bright stock / Group II base oils price discount to domestic Chinese prices narrows slightly, stays wider than during Q2 2023.

·        Wider discount makes arbitrage shipments from Asia to China more feasible, while domestic prices continue to deter domestic refiners from boosting base oils output.

·        Prospect of tighter supply from China's domestic refiners and competitive prices for overseas supplies could support firmer demand for regional supplies.

·        Asia Group I bright stock prices maintain steep discount to US prices, sustaining attraction of moving flexibag shipments to Latin America.