· US base oils prices extend rise versus feedstock/competing fuel prices.· Increasingly weak heating oil premium to crude oil adds to attraction of maximising base oils output.· Availability of surplus supply likely to remain limited while buyers continue to build stocks.· Build-up of stocks would cushion impact of any weather-related supply disruptions in the coming weeks.· Tropical disturbance in Atlantic Ocean has growing chance of developing into tropical depression later this week.· Build-up of base oils stocks would magnify surplus to clear from start of Q4 2024 if there are no or minimal supply disruptions in the coming weeks.· US Group II light-grade supply likely to stay structurally tighter following refiners’ moves to produce more Group III base oils instead.· US Group II export price-discount to domestic prices narrows further, reflecting tighter surplus availability.· Strength of US Group II light-grade prices boosts their premium to Asia prices, making more feasible trans-Pacific arbitrage opportunities that could help ease US supply tightness.· Wave of shipments from South Korea set to reach US in Aug 2024, following arrival of large volume in July 2024.· Rise in shipments follows sharp slowdown in arrivals in May-June 2024.· Signs of slowdown in US base oils shipment volumes to overseas markets in July 2024 from previous month likely to be a reflection of tighter domestic supply-demand fundamentals.· Shipments to outlets like West Africa and South Africa in past month would slow further any build-up of surplus volumes.· Signs of regular shipments from US to Singapore would slow further any build-up of surplus volumes.· US Group I supply could stay tighter than usual amid pick-up in demand from Europe, where Group I brightstock prices maintain premium to US prices.· Concern about tighter US supply incentivizes buyers in Latin America to line up alternative sources to cut their exposure to risk of disruptions with US shipments..· Argentina’s base oils supply rises to nine-month high in June 2024, contrasting with fall in lube demand and production.· Disconnect between supply and demand fundamentals triggers increase in surplus supply and rise in base oils stocks to nine-month high..· Rise in base oils stocks leaves buyers better positioned to manage any supply disruptions from US during Q3 2024.· Rise in base oils stocks could curb buyers’ urgency to secure additional volumes.· Rise in base oils stocks gives buyers more leverage to line up supplies from more distant markets that take longer to arrive.· Base oils imports account for shrinking share of Argentina’s supplies in Q2 2024..· Rising reliance on domestic supplies curbs further the country's exposure to any supply disruptions from US..· US, Europe and Asia’s total premium-grade base oils imports from Middle East stay relatively firm in May even with weaker Group III base oils prices in US especially..· Imports stay firm amid steady flows from Bahrain and UAE combined in first five months of 2024.· Firm imports from those sources point to steady output even with pressure on Group III base oils prices.· Steadier flows from Bahrain and UAE contrast with sharp drop in shipments from Qatar in first five months of 2024..· Europe’s Group I base oils supply availability could improve amid steadier regional output, seasonal slowdown in demand and firm prices that attract arbitrage shipments from other regions.· Supply gets boost in July 2024 from arrival of shipments from overseas markets like US and Saudi Arabia.· Another cargo from Saudi Arabia is scheduled to reach Europe in H1 Aug 2024, after loading in H2 July 2024.· Cargo heads for Europe even amid signs of drop in total shipments from Saudi Arabia in July 2024 from June 2024.· Cargo would follow higher-than-usual shipments from Yanbu and Jeddah to Europe in June 2024 for a second month.· Signs of increasing regularity of pick-up in flows from Saudi Arabia to Europe points to new trend that taps the region’s structurally tighter supply and firm base oils prices relative to other markets..· Europe’s Group II base oils supply likely to be readily available amid steady regional output and signs of still-regular shipments from US.· Europe’s Group II light-grade premium to FOB NE Asia prices rises by more than $100/tonne since mid-May 2024 to widest since beginning of 2024.· Widening premium, and still-wide heavy-grade premium to Asia prices, could boost interest in working that arbitrage.· Europe’s Group III base oils prices maintain premium to US prices, sustaining incentive for overseas refiners to move more shipments to Europe.· Exports of premium-grade base oils from Spain show signs of falling in July 2024 from the previous month, including dip in flows to northwest Europe.· Drop in supply could tighten availability of Group III supplies with OEM approvals..· Global base oils exports to key African markets fall to six-month low in May 2024 amid slump in shipments from US, slowdown in flows from Europe..· Drop in shipments highlights volatility of supplies from US.· Volatility of supplies from US boosts urgency for buyers in the region to line up more regular supply sources.· Drop in shipments highlights ongoing reliance on Europe for steady flows and for largest share of region’s supplies.· Nigeria's share of total global exports to Nigeria, South Africa, Egypt and Kenya combined falls to smallest amount in more than two years..· Slump in shipments to Nigeria highlights complications of moving cargoes to that market, including currency risks and tight supply in Europe.· Pick-up in shipments from Russia to Egypt in recent months highlights opportunity for supplies from that market to tap the tighter availability of Group I base oils in Europe..Americas/EMEA base oils demand outlook: Week of 29 July.Asia base oils supply outlook: Week of 29 July.Global base oils margins outlook: Week of 29 July.Global base oils cargo flows: Week of 29 July
· US base oils prices extend rise versus feedstock/competing fuel prices.· Increasingly weak heating oil premium to crude oil adds to attraction of maximising base oils output.· Availability of surplus supply likely to remain limited while buyers continue to build stocks.· Build-up of stocks would cushion impact of any weather-related supply disruptions in the coming weeks.· Tropical disturbance in Atlantic Ocean has growing chance of developing into tropical depression later this week.· Build-up of base oils stocks would magnify surplus to clear from start of Q4 2024 if there are no or minimal supply disruptions in the coming weeks.· US Group II light-grade supply likely to stay structurally tighter following refiners’ moves to produce more Group III base oils instead.· US Group II export price-discount to domestic prices narrows further, reflecting tighter surplus availability.· Strength of US Group II light-grade prices boosts their premium to Asia prices, making more feasible trans-Pacific arbitrage opportunities that could help ease US supply tightness.· Wave of shipments from South Korea set to reach US in Aug 2024, following arrival of large volume in July 2024.· Rise in shipments follows sharp slowdown in arrivals in May-June 2024.· Signs of slowdown in US base oils shipment volumes to overseas markets in July 2024 from previous month likely to be a reflection of tighter domestic supply-demand fundamentals.· Shipments to outlets like West Africa and South Africa in past month would slow further any build-up of surplus volumes.· Signs of regular shipments from US to Singapore would slow further any build-up of surplus volumes.· US Group I supply could stay tighter than usual amid pick-up in demand from Europe, where Group I brightstock prices maintain premium to US prices.· Concern about tighter US supply incentivizes buyers in Latin America to line up alternative sources to cut their exposure to risk of disruptions with US shipments..· Argentina’s base oils supply rises to nine-month high in June 2024, contrasting with fall in lube demand and production.· Disconnect between supply and demand fundamentals triggers increase in surplus supply and rise in base oils stocks to nine-month high..· Rise in base oils stocks leaves buyers better positioned to manage any supply disruptions from US during Q3 2024.· Rise in base oils stocks could curb buyers’ urgency to secure additional volumes.· Rise in base oils stocks gives buyers more leverage to line up supplies from more distant markets that take longer to arrive.· Base oils imports account for shrinking share of Argentina’s supplies in Q2 2024..· Rising reliance on domestic supplies curbs further the country's exposure to any supply disruptions from US..· US, Europe and Asia’s total premium-grade base oils imports from Middle East stay relatively firm in May even with weaker Group III base oils prices in US especially..· Imports stay firm amid steady flows from Bahrain and UAE combined in first five months of 2024.· Firm imports from those sources point to steady output even with pressure on Group III base oils prices.· Steadier flows from Bahrain and UAE contrast with sharp drop in shipments from Qatar in first five months of 2024..· Europe’s Group I base oils supply availability could improve amid steadier regional output, seasonal slowdown in demand and firm prices that attract arbitrage shipments from other regions.· Supply gets boost in July 2024 from arrival of shipments from overseas markets like US and Saudi Arabia.· Another cargo from Saudi Arabia is scheduled to reach Europe in H1 Aug 2024, after loading in H2 July 2024.· Cargo heads for Europe even amid signs of drop in total shipments from Saudi Arabia in July 2024 from June 2024.· Cargo would follow higher-than-usual shipments from Yanbu and Jeddah to Europe in June 2024 for a second month.· Signs of increasing regularity of pick-up in flows from Saudi Arabia to Europe points to new trend that taps the region’s structurally tighter supply and firm base oils prices relative to other markets..· Europe’s Group II base oils supply likely to be readily available amid steady regional output and signs of still-regular shipments from US.· Europe’s Group II light-grade premium to FOB NE Asia prices rises by more than $100/tonne since mid-May 2024 to widest since beginning of 2024.· Widening premium, and still-wide heavy-grade premium to Asia prices, could boost interest in working that arbitrage.· Europe’s Group III base oils prices maintain premium to US prices, sustaining incentive for overseas refiners to move more shipments to Europe.· Exports of premium-grade base oils from Spain show signs of falling in July 2024 from the previous month, including dip in flows to northwest Europe.· Drop in supply could tighten availability of Group III supplies with OEM approvals..· Global base oils exports to key African markets fall to six-month low in May 2024 amid slump in shipments from US, slowdown in flows from Europe..· Drop in shipments highlights volatility of supplies from US.· Volatility of supplies from US boosts urgency for buyers in the region to line up more regular supply sources.· Drop in shipments highlights ongoing reliance on Europe for steady flows and for largest share of region’s supplies.· Nigeria's share of total global exports to Nigeria, South Africa, Egypt and Kenya combined falls to smallest amount in more than two years..· Slump in shipments to Nigeria highlights complications of moving cargoes to that market, including currency risks and tight supply in Europe.· Pick-up in shipments from Russia to Egypt in recent months highlights opportunity for supplies from that market to tap the tighter availability of Group I base oils in Europe..Americas/EMEA base oils demand outlook: Week of 29 July.Asia base oils supply outlook: Week of 29 July.Global base oils margins outlook: Week of 29 July.Global base oils cargo flows: Week of 29 July