Global base oils - week of Nov 20: Price outlook - margins

·        Base oils values versus feedstock/competing fuel prices hold close to highest levels since late Q2/early Q3 2023 and well above average levels for the year, ICIS data shows.

·        Firm base oils values and weaker diesel values versus crude oil incentivize refiners to maintain or increase base oils output.

·        Firm base oils values versus feedstock/diesel values could raise expectations of adjustment to outright prices.

·        Any such pressure is likely to be larger in markets which face larger supply surplus, and to be smaller in markets where supply is tighter.

·        Asia Group I/II base oils price premium to regional gasoil prices hold at highest since end-Q2 2023.

·        Asia Group I bright stock premium to gasoil extends rise to highest since early Jun 2023.

·        Asia Group I premium to gasoil of more $150/t extends rise above average for the year of around $80/t.

·        Asia Group II light/heavy-grade premium to gasoil edges down, still up around $200/t since Aug 2023.

·        China’s domestic Group II light-grade premium to Shandong diesel prices holds firm at highest since early July 2023, starts to lag year-earlier levels.

·        Domestic base oil price premium to diesel holds firm as outright prices fall more slowly than diesel prices.

·        Domestic price premium to diesel rose this time last year because outright prices rose.

·        Signs of steadier base oil premium to diesel adds to signs of more mixed signals about state of supply-demand fundamentals in China’s market.

·        India’s Group II N70 premium to gasoil falls but still up close to $250/t since Aug 2023.

·        Still-high premium incentivizes overseas refiners to produce more base oils.

·        Europe’s Group II light-grade premium to VGO rises to highest since early Aug-2023.

·        Europe’s Group II light-grade premium to VGO still around $30/t below average for the year.

·        Europe’s Group I export price premium to gasoil rises to highest since early July 2023.

·        Europe’s domestic Group I premium to VGO falls, returns closer to average for the year of around $485/t.

·        US Group II light-grade export premium to heating oil falls sharply, stays more than $100/t above average so far this year.

·        US Group II export heavy-grade premium to VGO extends slide to lowest since end-Sep 2023, falls $60/t below average for the year of around $600/t.

·        US Group II light-grade domestic premium to VGO edges down, almost matching N600 export premium.

·        US Pale 60 premium to VGO holds close to highest this year after rising almost $280/t in past two months.