· Global base oils values stay unusually low relative to diesel prices even as outright prices edge higher in some markets.· Low base oils values vs diesel incentivize refiners to cut run-rates / focus on producing more diesel.· Firm diesel values vs crude oil add to refiners’ incentive to produce more of the motor fuel.· Any resistance from buyers to higher prices adds to refiners’ incentive to cut base oils production instead.· Any extended period of low base oils values vs diesel suggests markets face weak demand, plentiful supply.· Demand faces prospect of seasonal pick-up in coming weeks; supply shows signs of avoiding significant build-up of surplus volumes during Q3 2023.· Europe’s Group I base oils premium to diesel bottoms out in 1H Aug, still down more than $300/t since late June..· Europe’s Group II base oils premium to diesel holds at lowest since 1H March 2023, close to lowest levels in more than two years..· Asia’s Group I/II prices stop falling vs diesel, maintain steep discount to diesel..· Asia Group I discount to diesel holds at lowest since Nov 2022.· Domestic China Group II light-grade premium to diesel steadies in 1H Aug, holds close to lowest since Oct 2022..· US Group II light-grade posted-price premium to heating oil rises in 1H Aug after refiners raise posted prices.· Base oils premium still down more than $160/t since late June 2023, close to lowest since end-Oct 2022..Global base oils - week of Aug 14: Demand outlook
· Global base oils values stay unusually low relative to diesel prices even as outright prices edge higher in some markets.· Low base oils values vs diesel incentivize refiners to cut run-rates / focus on producing more diesel.· Firm diesel values vs crude oil add to refiners’ incentive to produce more of the motor fuel.· Any resistance from buyers to higher prices adds to refiners’ incentive to cut base oils production instead.· Any extended period of low base oils values vs diesel suggests markets face weak demand, plentiful supply.· Demand faces prospect of seasonal pick-up in coming weeks; supply shows signs of avoiding significant build-up of surplus volumes during Q3 2023.· Europe’s Group I base oils premium to diesel bottoms out in 1H Aug, still down more than $300/t since late June..· Europe’s Group II base oils premium to diesel holds at lowest since 1H March 2023, close to lowest levels in more than two years..· Asia’s Group I/II prices stop falling vs diesel, maintain steep discount to diesel..· Asia Group I discount to diesel holds at lowest since Nov 2022.· Domestic China Group II light-grade premium to diesel steadies in 1H Aug, holds close to lowest since Oct 2022..· US Group II light-grade posted-price premium to heating oil rises in 1H Aug after refiners raise posted prices.· Base oils premium still down more than $160/t since late June 2023, close to lowest since end-Oct 2022..Global base oils - week of Aug 14: Demand outlook