· Europe’s Group I base oils premium to diesel edges lower, stays close to highest since Aug 2022.· Europe’s Group II base oils premium to diesel falls faster than Group I base oils, stays high, and much higher than Q1 2023 levels..· Firm base oil values point to tight supply and firm demand, incentivize refiners to increase output.· Asia-Pacific Group I/II base oils premium to diesel falls to lowest in almost two months, stays much higher than 2H 2022 levels..· Falling base oils premium points to changing supply-demand fundamentals vs Q1 2023.· Relatively firm base oils premium vs historic levels suggests fundamentals stay tight, incentivize refiners to maintain higher output.· Steeper fall in Asia base oils premium than Europe base oils premium suggests fundamentals are tighter in Europe than in Asia.· China’s domestic Group II light-grade base oils premium to Shandong diesel recovers, stays down from Feb-May 2023 levels, well up from Q1-Q3 2022 levels..· China’s base oils premium to diesel likely to incentivize refiners to increase output, on top of likely rise in output following completion of round of plant maintenance work.· Any such move would likely impact China’s base oils imports requirements.· Major US Group II producers cut posted prices for third time this year amid weak market fundamentals.· Steady drop in posted prices contrasted with wave of posted price increases during same period last year.· US Group II posted price premium to heating oil falls to lowest since early-April, remains relatively firm..· Firm US posted price premium to heating oil incentivizes refiners to maintain higher output levels..Global base oils – week of June 12: Price outlook – arbitrage
· Europe’s Group I base oils premium to diesel edges lower, stays close to highest since Aug 2022.· Europe’s Group II base oils premium to diesel falls faster than Group I base oils, stays high, and much higher than Q1 2023 levels..· Firm base oil values point to tight supply and firm demand, incentivize refiners to increase output.· Asia-Pacific Group I/II base oils premium to diesel falls to lowest in almost two months, stays much higher than 2H 2022 levels..· Falling base oils premium points to changing supply-demand fundamentals vs Q1 2023.· Relatively firm base oils premium vs historic levels suggests fundamentals stay tight, incentivize refiners to maintain higher output.· Steeper fall in Asia base oils premium than Europe base oils premium suggests fundamentals are tighter in Europe than in Asia.· China’s domestic Group II light-grade base oils premium to Shandong diesel recovers, stays down from Feb-May 2023 levels, well up from Q1-Q3 2022 levels..· China’s base oils premium to diesel likely to incentivize refiners to increase output, on top of likely rise in output following completion of round of plant maintenance work.· Any such move would likely impact China’s base oils imports requirements.· Major US Group II producers cut posted prices for third time this year amid weak market fundamentals.· Steady drop in posted prices contrasted with wave of posted price increases during same period last year.· US Group II posted price premium to heating oil falls to lowest since early-April, remains relatively firm..· Firm US posted price premium to heating oil incentivizes refiners to maintain higher output levels..Global base oils – week of June 12: Price outlook – arbitrage