· Europe Group II prices maintain steep premium to US Group II light-grade prices, even steeper premium to Asia Group II heavy-grade prices.· Steep premium incentivizes overseas sellers to continue to target Europe with surplus Group II volumes from US and Asia.· Possibility of higher prices in US and Asia could add to interest in locking in supplies at current prices to take advantage of current arbitrage opportunities.· Possibility of steady-to-higher prices in Europe boosts attraction of Group II arbitrage shipments whose value could rise during voyage to Europe.· Europe’s extended Group II price premium to Asia/US prices suggests sufficiently-firm fundamentals to sustain the premium.· Europe’s Group I prices maintain steep premium to Asia prices.· Steep premium keeps shut the arbitrage to move Europe shipments to Mideast Gulf/India, sustains incentive for those markets to tap supplies from Asia instead.· Closed arbitrage from Europe increases possibility of regional supply-build.· Closed arbitrage from Europe for extended period suggests regional supply remains sufficiently balanced-to-tight to avoid needing outlets to clear any surplus.· Asia’s Group II heavy-grade discount to US prices stays wider, still much narrower than 2H 2022.· Asia’s Group I bright stock price discount to domestic Chinese prices stays at widest in more than three months, making arbitrage more feasible.· Asia’s Group II price discount to domestic Chinese prices stays at widest in more than three months, making arbitrage more feasible.· Any rise in domestic Chinese prices to boost squeezed margins would make arbitrage from Asia even more feasible..Global base oils - week of Aug 7: Price outlook - margins
· Europe Group II prices maintain steep premium to US Group II light-grade prices, even steeper premium to Asia Group II heavy-grade prices.· Steep premium incentivizes overseas sellers to continue to target Europe with surplus Group II volumes from US and Asia.· Possibility of higher prices in US and Asia could add to interest in locking in supplies at current prices to take advantage of current arbitrage opportunities.· Possibility of steady-to-higher prices in Europe boosts attraction of Group II arbitrage shipments whose value could rise during voyage to Europe.· Europe’s extended Group II price premium to Asia/US prices suggests sufficiently-firm fundamentals to sustain the premium.· Europe’s Group I prices maintain steep premium to Asia prices.· Steep premium keeps shut the arbitrage to move Europe shipments to Mideast Gulf/India, sustains incentive for those markets to tap supplies from Asia instead.· Closed arbitrage from Europe increases possibility of regional supply-build.· Closed arbitrage from Europe for extended period suggests regional supply remains sufficiently balanced-to-tight to avoid needing outlets to clear any surplus.· Asia’s Group II heavy-grade discount to US prices stays wider, still much narrower than 2H 2022.· Asia’s Group I bright stock price discount to domestic Chinese prices stays at widest in more than three months, making arbitrage more feasible.· Asia’s Group II price discount to domestic Chinese prices stays at widest in more than three months, making arbitrage more feasible.· Any rise in domestic Chinese prices to boost squeezed margins would make arbitrage from Asia even more feasible..Global base oils - week of Aug 7: Price outlook - margins