Global base oils - week of July 10: Price outlook - margins

·        Global base oils prices extend fall vs diesel, contrasting with firmer diesel values vs crude.

·        Falling base oils premium to diesel incentivizes refiners to produce supplies to cover term commitments, reduces incentive to produce surplus volumes for export market.

·        Europe’s Group I base oils price premium to diesel falls to three-month low, still up more than $250/t since 2H Jan 2023.

·        Europe’s Group II base oils price premium to diesel falls close to three-month low; size of fall smaller than for Group I base oils.

·        Asia’s Group I/II base oils price premium to diesel falls to four-month low.

·        Asia’s Group I/II premium to diesel still up more than $150/t since 2H Jan 2023; returns to levels that discourage refiners from supplying additional volumes.

·        India’s retail diesel premium to Asia Group II light-grade base oil prices rises to highest since 1H 2022.

·        China’s domestic Group II light-grade price premium to Shandong diesel steadies close to five-month low, remains well above typical levels.

·        Relatively firm domestic light-grade price premium incentivizes refiners to maintain or increase output.

·        US domestic base oils price premium to heating oil stays at lowest since start of year.