· Global base oils prices mostly stay under pressure versus feedstock/competing fuel prices, maintaining incentivize for refiners to limit production to cover term/domestic commitments only.· Fob Asia Group I base oils values hold firm/rise vs regional gasoil prices, ICIS data shows.· Fob Asia Group I bright stock premium to gasoil prices holds close to highest since mid-2023..· Firm Group I heavy-grade values more than outweigh weakness of light grades, incentivize refiners to boost production.· Fob Asia Group II base oils values stay weak even as they edge up vs regional gasoil prices.· Still-small premium of Group II heavy-grade prices over light-grade prices compounds pressure on Group II margins.· Weak Group II base oils values curb incentive for refiners to raise output..· China’s domestic Group II light-grade price premium to Shandong diesel prices extends rise to highest since mid-2023, outpaces year-earlier levels..· Rising base oil premium to diesel, and weak domestic diesel premium to crude, incentivizes domestic refiners to increase base oils output.· China’s domestic Group II light-grade premium surged in Feb-May 2023 before slumping as supply outpaced weaker-than-expected demand.· Any repeat of that trend this year would require stronger demand to avoid same outcome..· CFR India Group II N70 premium to regional gasoil prices stays low even as it edges higher..· Premium stays weaker even amid signs of slowdown in supplies from Saudi Arabia to India.· Weaker premium incentivizes overseas refiners to maintain firm offers or to redirect supplies back into diesel pool..· Europe’s Group I/II/III domestic prices extend slide vs feedstock prices, incentivizing refiners to reduce supply.· Group I light-grade premium to VGO falls to lowest since start of Q4 2023, Group II light-grade premium to lowest since Oct 2023, Group III 4cst premium to lowest since mid-2022..· Group II/III light-grade premium to VGO stays well below year-earlier levels, suggesting fundamentals are weaker than year-earlier levels.· Price signals could spur response from refiners that leaves supply tighter than expected if fundamentals are not weaker than year-earlier levels..· US Group II export price differentials to heating oil stay unusually weak even as they recover from recent lows.· Narrow premium of Group II heavy grades to light grades compounds Group II price weakness, incentivizes refiners to cut production..· US Group II light-grade domestic price premium to VGO extends fall to lowest since end-Q3 2023.· US Group II heavy-grade domestic price premium to VGO extends fall to lowest since mid-2022.· Sliding US Group II domestic price premiums to VGO could add to incentive for refiners to trim output even as values stay higher than usual.· US Group II light/heavy grade posted price premium to heating oil holds firm.· Firm premium could incentivize buyers to hold back amid growing disconnect with domestic spot prices..Global base oils - week of Jan 29: Demand outlook
