Global base oils - week of Jan 29: Price outlook - margins

·        Global base oils prices fall versus feedstock/competing fuel prices as mostly-steady outright prices contrast with rebound in crude/diesel prices, ICIS data shows.

·        Falling base oils margins incentivize refiners to cut production.

·        Fob Asia Group II N150/N500 premium to regional gasoil prices extends slide to lowest in almost four months.

·        Fob Asia Group II premium gets little additional support from N500 prices, which maintain small premium to light-grade prices.

·        Sliding premium incentivizes refiners to cut output.

·        Fob Asia Group I light/heavy-neutrals price premium to gasoil falls less steeply; bright stock premium holds firm.

·        Firmer Group I premium to gasoil contrasts with weakness of Group II, incentivizes refiners to maintain or increase output.

·        China’s domestic Group II light-grade premium to domestic diesel prices steadies close to highest since early July 2023.

·        Group II light-grade premium to diesel holds at similar level to year-earlier levels.

·        Domestic Group II premium to diesel then surged in Feb and March 2023.

·        Cfr India Group II N70 premium to regional gasoil prices extends fall to lowest since Q3 2023.

·        Sliding premium incentivizes refiners to redirect very-light grades back into diesel pool.

·        Europe’s Group I domestic/export price premium to VGO falls to similar levels to year-earlier levels.

·        Europe’s sliding Group I premium to VGO incentivizes refiners to cut surplus supply.

·        Europe’s Group III base oils premium to VGO extends fall to lowest since Q2 2022.

·        US Group II export light/heavy grade prices move to increasingly steep discount to US heating oil prices.

·        US Group II export heavy-grade premium to VGO falls to lowest since Sep 2020.

·        Sliding Group II export price premium to heating oil/VGO incentivizes refiners to cut production.

·        US Group II domestic heavy-grade premium to VGO falls to lowest since 2H 2022.

·        Lower domestic premium adds to incentive to cut production.

·        US Group II light-grade posted price premium to VGO falls to lowest since start of Q4 2024.

·        Lower premium could put pressure on refiners to raise posted prices to maintain margins.

·        Steep discount of US export prices to domestic prices could complicate any moves to raise posted prices.