Global base oils - week of Sep 4: Price outlook - margins

·        Global base oils prices stay under sustained pressure versus competing fuel prices even as diesel values weaken versus crude prices.

·        Light-grade base oil export prices especially hold at steep discounts to diesel prices, ICIS data shows.

·        Trend raises prospect of more base oil refinery run-cuts or extension of plant-maintenance work as refiners focus on producing more diesel instead.

·        Relative ease with which light-grade base oils can be redirected back into diesel pool raises prospect of tightening availability of these supplies.

·        Trend shows signs of already materializing in China, where weaker-than-expected recovery in base oils production coincides with unusually weak base oils prices vs diesel.

·        Heavy-neutrals base oil price premium to diesel holds close to lowest in months, especially for export grades and especially in Europe and Asia.  

·        Base oils price weakness versus diesel prices contrasts with relatively steadier values versus VGO.

·        Base oils values versus VGO continue to trend lower, even if at a slower pace than diesel.

·        Europe Group II light-grade values versus VGO edge down to lowest since early 2022.

·        US Group II light-grade values versus VGO edge down to lowest since early 2022.