· US Group II domestic base oils price-premium to feedstock prices holds steady in narrow range, even if down from year-earlier levels..· Steady margins could get additional support from any further drop in crude oil prices..· Steadier margins curb incentive for refiners to trim output.· Higher output and weak domestic demand likely to trigger rise in surplus supplies.· US base oils stocks typically rise in second half of the year, with pace of increase speeding up when net exports fall.· Typical drop in base oils output in first half of the year cushions impact of lower net exports during that period.· Steadier output in second half of the year removes that cushion.· US’ net base oils exports fall to nine-month low in June 2025, while output likely rose following completion of most plant-maintenance work..· Combination of higher output and lower net exports likely to trigger rise in US stocks.· Exports would need to remain at elevated levels or imports would need to fall over coming months to slow pace of rise in stocks.· US Group II heavy-grade base oils supply could stay at more manageable levels amid signs of increasingly feasible arbitrage opportunities to move additional supplies to Europe..· Widening US Group II heavy-grade discount to Europe prices contrasts with narrowing discount to CFR India prices.· Dynamic adds to incentive to move more supplies to Europe..· US Group I base oils supply shows mixed signals.· US exports to India rise in June 2025 and include Group I supplies..· US Group I brightstock cargo duly reaches India in July 2025.· Shipment helps to clear US market of surplus Group I supplies at end-Q2 2025.· Shipment also highlights existence of surplus Group I supplies even before seasonal slowdown in US market during third quarter.· US brightstock export-price maintains increasingly steep discount to CFR India price during Q3 2025..· Steep discount facilitates shipment of additional Group I supplies to India, curbing speed of any supply-build in US' domestic market.· Steep discount also points to prospect of pick-up in additional Group I supplies in US market..· Europe’s base oils supply likely to be readily available in face of weak regional demand.· Removal of any surplus volumes faces challenge of hard-to-work arbitrage and more competitive prices in other markets like US.· US Group II heavy-grade export-price maintains steep discount to Europe Group I SN 500 export-price, reflecting that dynamic..· Europe’s Group I base oils supply already gets boost from pick-up in Italy’s output at end-Q2 2025 following completion of plant-maintenance..· Similar dynamic likely to play out in other markets where Group I refineries underwent plant-maintenance work in recent months..· Europe’s Group I base oils supply gets further boost from resumption of flows from Turkey to the region..· Flows from Turkey point to sufficient domestic Group I supplies amid sustained flow of imports from Russia.· Flows from Turkey to Europe tap still-steep premium of domestic Europe Group I prices over Turkey's imported prices for supplies from Russia..· Steep price-premium sustains attraction for Turkey to boost Group I exports to Europe..· Europe’s Group II base oils supply likely to be readily available amid signs of healthy regional output and steady flows from US.· US base oils exports to Europe dip to six-month-low in June 2025..· Lower exports balance out rise in shipments in May 2025, remain in narrow range since start of 2025.· Europe’s Group II base oils heavy-grade prices especially stay unusually high vs Group I base oils, and vs Group II heavy-grade prices in US and Asia..· Sustained price-strength points to firm supply-demand fundamentals.· Sustained price-strength contrasts with persistent weakness of Group II heavy-grade prices and surplus supplies in US market..Americas/EMEA base oils demand outlook: Week of 18 August.Asia base oils supply outlook: Week of 18 August.Global base oils arb outlook: Week of 18 August.Base Oil News stories and analysis also available on ICIS platform
