· US Group II base oils export prices extend fall in Feb 2024.· Lower export prices widen sharply their discount to US domestic prices.· Lower export prices boost feasibility of arbitrage to multiple destinations.· Lower export prices slash margins, add to refiners’ incentive to cut production.· Lower export prices, and ongoing incentive to maximise exports and cut production, suggest US’ domestic demand stays unusually weak just weeks ahead of start of typical seasonal pick-up in consumption.· US Group II export prices fall sharply in Q4 2023, boosting arbitrage opportunities to Latin America, Europe, Africa and India..· Lower prices coincide with surge in US base oils shipments in Nov and Dec 2023, boosting Q4 2023 exports to record-high..· Surge in US base oil exports balances out weak domestic demand, limits supply-build at end-2023..· US export price discount to prices in domestic and overseas markets stays unusually wide in Jan 2024, widens further in Feb 2024.· Wider price discount raises prospect of US base oils exports to markets like Africa and India staying higher than usual in early 2024.· Steep price discount and higher-than-usual exports point to ongoing supply-surplus.· US export price premium to VGO extends slide to lowest since 1H 2020 when Covid-related restrictions cut domestic and overseas demand.· US refiners slashed production in 1H 2020 in response to weak demand and prices..· High base oils exports in Q4 2023 coincide with steep, and then ongoing, price discount to prices in domestic market, to prices in other regions, and to VGO prices.· Trend suggests that US’ domestic demand remained weak in early 2024.· Wave of exports and incentive for refiners to cut production likely cushions impact of weak domestic demand, limits size of supply-build in early 2024.· Trend of steep export price discounts and high export volumes likely to continue if US’ domestic demand stays weak.· Trend of steep export price discounts and high export volumes leaves US refiners with smaller surplus to meet consumption if US’ domestic demand revives..US’ Dec base oils exports stay high.US’ Nov base oils/lube demand falls.Global base oils - week of Feb 19: Price outlook - margins
· US Group II base oils export prices extend fall in Feb 2024.· Lower export prices widen sharply their discount to US domestic prices.· Lower export prices boost feasibility of arbitrage to multiple destinations.· Lower export prices slash margins, add to refiners’ incentive to cut production.· Lower export prices, and ongoing incentive to maximise exports and cut production, suggest US’ domestic demand stays unusually weak just weeks ahead of start of typical seasonal pick-up in consumption.· US Group II export prices fall sharply in Q4 2023, boosting arbitrage opportunities to Latin America, Europe, Africa and India..· Lower prices coincide with surge in US base oils shipments in Nov and Dec 2023, boosting Q4 2023 exports to record-high..· Surge in US base oil exports balances out weak domestic demand, limits supply-build at end-2023..· US export price discount to prices in domestic and overseas markets stays unusually wide in Jan 2024, widens further in Feb 2024.· Wider price discount raises prospect of US base oils exports to markets like Africa and India staying higher than usual in early 2024.· Steep price discount and higher-than-usual exports point to ongoing supply-surplus.· US export price premium to VGO extends slide to lowest since 1H 2020 when Covid-related restrictions cut domestic and overseas demand.· US refiners slashed production in 1H 2020 in response to weak demand and prices..· High base oils exports in Q4 2023 coincide with steep, and then ongoing, price discount to prices in domestic market, to prices in other regions, and to VGO prices.· Trend suggests that US’ domestic demand remained weak in early 2024.· Wave of exports and incentive for refiners to cut production likely cushions impact of weak domestic demand, limits size of supply-build in early 2024.· Trend of steep export price discounts and high export volumes likely to continue if US’ domestic demand stays weak.· Trend of steep export price discounts and high export volumes leaves US refiners with smaller surplus to meet consumption if US’ domestic demand revives..US’ Dec base oils exports stay high.US’ Nov base oils/lube demand falls.Global base oils - week of Feb 19: Price outlook - margins