Global base oils - week of Nov 13: Price outlook - margins

·        Global base oils prices rise relative to competing and feedstock prices, ICIS data shows.

·        Trend reflects relatively steady base oils prices and sliding crude oil/diesel prices.

·        Firmer base oils values incentivize refiners to maintain or increase output.

·        Firmer base oils values give refiners room to adjust prices if they need to clear or prevent supply-build.

·        Base oils values could take longer to react to lower feedstock/diesel prices amid more limited surplus supply in Europe and Asia.

·        Fob Asia Group I light-neutral prices rise to premium to gasoil prices for first time since end-Jun 2023.

·        Fob Asia Group I bright stock premium to gasoil rises to highest since 1H Jun 2023.

·        Fob Asia Group I premium to gasoil rises to more than $150/t, up from average levels of close to $80/t so far in 2023.

·        Fob Asia Group II light-grade premium to gasoil rises to highest since early-Jun 2023.

·        Fob Asia Group II premium to gasoil rises to around $180/t, well above average of around $100/t so far this year.

·        Domestic China Group II light-grade price premium to Shandong diesel prices holds close to highest since 1H July 2023.

·        Domestic China Group II light-grade premium almost matches year-earlier levels, and matches year-earlier rebound during Q4 2022.

·        Domestic Group II light-grade premium to diesel rebounds even as outright prices hold in narrow range since end-Sep 2023.

·        Domestic Group II light-grade premium to diesel by contrast rebounded in Q4 2022 because of surge in outright prices.

·        Cfr India Group II very-light grade base oil premium to regional gasoil prices extends rise to highest since end-May 2023.

·        Rising premium incentivizes refiners to direct more light grades to India rather than into diesel pool.

·        Fob Europe Group I prices extend rise versus gasoil to levels well above average levels so far this year.

·        Domestic Europe Group I light-grade premium to VGO rises above $390/t, highest since early Aug 2023, up from average levels of less than $350/t so far this year.

·        Domestic Europe Group III (low) price premium to VGO rises to highest since mid-Sep 2023.

·        Europe Group III (low) 4cst premium of close to $900/t holds relatively steady since Sep 2023, stays well below average levels of around $1,270/t so far this year.

·        US Group II export light-grade premium to heating oil extends rise, close to highest this year.

·        US Group II export light-grade price premium contrasts with average of discount to heating oil so far this year.

·        Higher base oil premium gives refiners room to adjust prices to make arbitrage opportunities more feasible if required.

·        US domestic Group II light-grade premium to VGO rises to more than $540/t, highest since 1H May 2023.

·        Domestic Group II light-grade premium to VGO extends rise to levels above average of around $510/t so far this year.

·        US Group II light-grade posted price premium to VGO rises to highest since Q1 2023.

·        US domestic Group III 4cst premium to VGO rises to around $1,100/t, highest since mid-Aug 2023.

·        US Group III 4cst premium to VGO continues to lag average of around $1,220/t so far this year.