Global base oils - week of May 8: Price outlook - inter-grades

·        Europe Group II premium to Group I prices stays unusually narrow – boosting attraction for blenders to use more premium-grade supplies.

·        Europe Group II premium to Group I stays narrow even at same time as Group II price maintains steeper premium to US prices.

·        Trend limits pressure on prices to rise, boosts attraction of moving more supplies to Europe.

·        Europe Group III unapproved/less approved price premium to Group I/II falls to narrowest in more than three months.

·        Extension of that trend could start to attract Group I/II buyers.

·        Europe Group III approved price premium to Group I eases from Feb-April levels, stays unusually high, boosting incentive to minimize consumption of the grade.

·        Europe Group III 8cst premium to Group II heavy grades at narrowest in more than three months, stays much higher than in 2H 2022.

·        Europe domestic Group I premium to export prices widens further – incentivizing refiners to focus on regional market.

·        Asia Group II premium to Group I prices widens, especially for light grades.

·        Trend likely to boost attraction of consuming more Group I light grades where possible.

·        Asia Group II heavy-grade premium to light grades stays unusually narrow.

·        Trend contrasts with Europe/US markets and sustains arbitrage to move heavy grades to those markets.

·        Domestic China Group II light-grade discount widens vs domestic prices for imported supplies – boosting attraction of supplies from domestic sources.

·        Domestic China Group II light-grade discount to Group I prices moves to widest since 2H March.