Global base oils - week of Aug 14: Price outlook - margins

·        Global base oil values show signs of steadying versus diesel prices.

·        Global base oils values stay unusually weak versus diesel prices even as they stabilize.

·        Global base oils values hold at levels that deter refiners from producing additional supplies; instead incentivize them to boost diesel output.

·        Removal of additional supplies would give refiners more leverage to respond to surge in feedstock/diesel prices since late June.

·        Europe’s Group I/II prices show signs of steadying versus diesel, after sliding sharply since 2H June.

·        Europe’s Group I premium to diesel holds close to lowest since Jan 2023; Group II values at lowest since early March 2023.

·        Asia’s Group I/II base oils values vs diesel maintain steep discount to diesel.

·        Asia’s Group I prices vs diesel slip to lowest since Nov 2022; Group II values at lowest since Jan 2023.

·        China’s domestic Group II light-grade base oil premium to Shandong diesel edges up after sustained slide since 2H June; holds close to lowest since Oct 2022.

·        Margins throughout Asia/China incentivize refiners to prioritise diesel over base oils.

·        US Group II light-grade posted price premium to heating oil rises after several refiners raise posted prices.

·        Posted price premium to heating oil stays close to lowest since Oct 2022 even with the price-increase.