· Diesel prices stay unusually firm versus crude oil, even if down from recent peak in late Aug.
· Firm diesel prices contrast with weak base oils values, incentivizing refiners to focus on middle distillates production.
· Americas market faces plant maintenance work in coming weeks affecting Group I supplies.
· US market faces possibility of weather-related supply disruptions during peak period of Atlantic hurricane season.
· US refiners show signs of limiting supply-build during Q3 2023 amid high export volumes.
· US’ June base oils/lube supply already lags demand for fifth time in six months.
· Supply shortfall reflects impact of plant maintenance work throughout most of 1H 2023 and as firm exports cushion domestic demand weakness.
· Supply shortfall leaves market more balanced ahead of seasonal slowdown in demand during Q3 2023.
· US’ July base oils exports rise close to record-high levels.
· High volumes counter seasonal slowdown in domestic demand, add to prospect of more balanced supply in Q3 2023.
· Brazil’s July base oils supply stays high, maintaining surplus over demand close to nine-month high.
· Higher-than-usual surplus for second month triggers supply-build ahead of scheduled plant maintenance in the country.
· Europe’s base oils market shows signs of staying tight for Group I supplies, contrasting with readier availability of Group II and Group III base oils.
· Europe’s June Group I base oils supply falls to multi-year low on slump in output, dearth of imports from Russia.
· Lower supply balances out impact of weak regional demand, curbs surplus volumes for other markets, raises prospect of balanced-to-tight supply in Q3 2023, when demand faces seasonal slowdown.
· Group II base oils accounts for record-high share of Europe’s base oils supply in June, while Group I accounts for record-low share.
· Trend highlights region’s ongoing transition from Group I to Group II base oils.
· Netherlands’ June base oils supply lags demand for second month.
· Supply shortfall in June mirrors other key markets in Europe, adding to signs of balanced-to-tighter regional supply heading into Q3 2023, when demand typically slows.
· Trend raises prospect of smaller regional supply-build in Q3 2023.
· UK’s June base oils supply lags demand by widest margin since Jan 2020.
· Surge in UK’s supply shortfall reverses supply-build in April and May, leaves fundamentals more balanced at start of Q3 2023.
· Sharp reversal in UK’s supply-demand dynamics highlights speed with which sellers can clear surplus even at a time of weaker demand.
· Trend highlights more muted competition for access to Africa market amid slowdown in shipments from Russia.
· Europe’s Group III base oils supply shows signs of easing as drop in premium-grade exports from Spain in August coincide with lower volumes from Asia-Pacific.
· Lower supply would follow weaker regional Group III prices in recent months in face of slack demand, healthy availability.
· Lower supply would help to rebalance Europe's weaker supply-demand fundamentals in recent months.