· US Group II export base oils price-premium to vacuum gasoil starts Q3 2025 at slightly lower levels than at start of Q3 2024..· In Q3 2024, US base oils price premium to VGO extends rise after surging from end-Q1 2024..· US base oils price-premium to VGO extends surge in Q3 2024 even with less feasible arbitrage to outlets like Europe, Middle East and India..· Surge in base oils price-premium to VGO in Q2-Q3 2024 coincides with sustained US supply shortfall versus demand, triggering slide in stocks..· US market starts Q3 2025 with Group II heavy-grade export price at steep discount to prices in Europe and India..· Steep US price-discount facilitates shipment of more arbitrage cargoes to those markets.· Steep price-discount and regular arbitrage cargoes could slow pace of any build-up of surplus supplies in US over coming months.· US market already starts Q3 2025 with stocks likely at lower-than-usual levels following plant-maintenance work in US and overseas markets in Q2 2025.· US base oils stocks already extend sharp fall to eight-month low at start of Q2 2025..· Dynamic suggests that US base oils export-price premium to VGO is well-positioned to repeat or exceed the surge that it enjoyed in Q2-Q3 2024..· Yet US base oils export price-premium to VGO in Q2 2025 fails to outpace price-premium in Q2 2024 despite unusually tight supply fundamentals in US and overseas markets early this year.· Besides US, base oils supply falls in Europe and Asia at start of Q2 2025 amid overlapping round of plant-maintenance.· Base oils supply from Americas, Europe and Asia duly falls in April 2025, matching second-lowest monthly level since mid-2020..· Lower output in key global markets points to tighter supply fundamentals this year than last year..· US base oils export price-premium to VGO holds in narrow range from early-May 2025 and into start of Q3 2025 despite tighter supply fundamentals.· US base oils export heavy-grade price discount to Europe/India prices similarly stays unusually wide for time of year through Q2 2025 and into start of Q3 2025 despite tighter supply fundamentals.· More range-bound US base oils margins and sustained feasibility of arbitrage opportunities could reflect attraction of maintaining status-quo.· More range-bound US base oils margins and sustained feasibility of arbitrage opportunities could also point to concern that market fundamentals are weaker this year than last year, rather than stronger.· Development of market fundamentals over coming months is set to reveal accuracy of any such concerns and the underlying factors supporting them..Global base oils margins outlook: Week of 7 July.Asia base oils demand outlook: Week of 7 July.Asia base oils supply outlook: Week of 7 July.US’ April base oils supply lags demand
· US Group II export base oils price-premium to vacuum gasoil starts Q3 2025 at slightly lower levels than at start of Q3 2024..· In Q3 2024, US base oils price premium to VGO extends rise after surging from end-Q1 2024..· US base oils price-premium to VGO extends surge in Q3 2024 even with less feasible arbitrage to outlets like Europe, Middle East and India..· Surge in base oils price-premium to VGO in Q2-Q3 2024 coincides with sustained US supply shortfall versus demand, triggering slide in stocks..· US market starts Q3 2025 with Group II heavy-grade export price at steep discount to prices in Europe and India..· Steep US price-discount facilitates shipment of more arbitrage cargoes to those markets.· Steep price-discount and regular arbitrage cargoes could slow pace of any build-up of surplus supplies in US over coming months.· US market already starts Q3 2025 with stocks likely at lower-than-usual levels following plant-maintenance work in US and overseas markets in Q2 2025.· US base oils stocks already extend sharp fall to eight-month low at start of Q2 2025..· Dynamic suggests that US base oils export-price premium to VGO is well-positioned to repeat or exceed the surge that it enjoyed in Q2-Q3 2024..· Yet US base oils export price-premium to VGO in Q2 2025 fails to outpace price-premium in Q2 2024 despite unusually tight supply fundamentals in US and overseas markets early this year.· Besides US, base oils supply falls in Europe and Asia at start of Q2 2025 amid overlapping round of plant-maintenance.· Base oils supply from Americas, Europe and Asia duly falls in April 2025, matching second-lowest monthly level since mid-2020..· Lower output in key global markets points to tighter supply fundamentals this year than last year..· US base oils export price-premium to VGO holds in narrow range from early-May 2025 and into start of Q3 2025 despite tighter supply fundamentals.· US base oils export heavy-grade price discount to Europe/India prices similarly stays unusually wide for time of year through Q2 2025 and into start of Q3 2025 despite tighter supply fundamentals.· More range-bound US base oils margins and sustained feasibility of arbitrage opportunities could reflect attraction of maintaining status-quo.· More range-bound US base oils margins and sustained feasibility of arbitrage opportunities could also point to concern that market fundamentals are weaker this year than last year, rather than stronger.· Development of market fundamentals over coming months is set to reveal accuracy of any such concerns and the underlying factors supporting them..Global base oils margins outlook: Week of 7 July.Asia base oils demand outlook: Week of 7 July.Asia base oils supply outlook: Week of 7 July.US’ April base oils supply lags demand
