Global base oils - week of Feb 19: Price outlook - margins

·        Global base oils prices extend fall versus competing fuel/feedstock prices.

·        Falling margins insinuate weakening supply-demand fundamentals, incentivize refiners to cut production, especially for surplus export supplies.  

·        FOB Europe export Group I price premium to gasoil stays unusually low, incentivizing refiners to minimize supplies.

·        FOB Europe export Group I SN 150/SN 500 price premium to gasoil falls to lowest since Jan 2023, bright stock premium falls to lowest since Q1 2022.

·        Europe domestic Group I SN 150 premium to VGO falls close to lowest since April 2023.

·        Europe domestic Group II N150 premium to VGO falls to three-month low, stays more than $150/t below year-earlier levels.

·        Europe domestic Group III 4cst (low) premium to VGO falls to lowest since Q2 2022.

·        US Group II export light/heavy grade price discount to heating oil widens further, pointing to weak fundamentals and incentivizing refiners to cut supply.

·        US Group II export heavy-grade premium to light grades holds close to narrowest in two years, compounding impact of weak values versus heating oil/VGO.

·        US Group II domestic heavy-grade prices especially maintain steep premium to export prices.

·        US Group II domestic prices fall much less steeply versus VGO.

·        Smaller fall in domestic-price premium curbs pressure on refiners to cut production – raising prospect of prolonging persistent availability of surplus supply.

·        US Group II posted price premium to VGO falls to lowest since Q3 2023.

·        US Group II posted price premium to domestic prices extends rise to highest in more than eight years.

·        Smaller fall in Group II posted price premium to VGO, and rising premium to domestic prices, curbs incentive for refiners to cut production.