· Base oils values hold firm vs diesel, boosting refiners’ incentive to maintain or increase output.· US base oils supply likely to face upward pressure amid seasonal slowdown in domestic demand, completion of plant maintenance work.· Trend boosts attraction for US refiners to sustain high exports to avoid a large supply-build at year-end, like last year.· Firm US Group II light-grade export price premium to heating oil gives refiners more leverage to cut outright prices to boost arbitrage opportunities.· Narrower US Group II heavy-grade export premium to light-grade prices points to ongoing surplus of heavy grades.· US set to take delivery of unusually large volume of supplies from South Korea in Dec 2023 amid signs some shipments were delayed from Nov 2023.· Delays leave US supplies from South Korea lower than usual in Nov 2023.· US supply enters Q4 2023 relatively balanced after supply falls in Sept 2023 yoy for fourth time in five months..· Lower supply in Q3 2023 helps to counter seasonal slowdown in US’ domestic demand.· Lower supply curbs build-up of surplus volumes and pressure to clear those volumes.· Mexico’s move in Oct 2023 to restrict base oils imports adds to benefit of lower US supply heading into Q4 2023..· Brazil’s October base oils output falls to lowest since mid-2020..· Sharp fall in Brazil's base oils output in 2H 2023 sustains strong demand for base oils supplies from overseas markets, especially the US.· Expected reversion of base oils output to more typical levels from end-2023/early 2024 could prompt reversion of Brazil’s base oils imports to more typical levels..· Europe’s Group I base oils supply shows signs of staying lower than usual.· Trend limits surplus supply at year-end.· Widening discount of US and Asia Group II prices to Europe prices points to more balanced supply in Europe and surplus volumes in US/Asia.· Europe’s Group II supply could get boost from any arbitrage shipments lined up from those markets.· Europe’s Group III base oils supply faces slowdown in shipments from within Europe over past month, and signs of lower volumes from Mideast Gulf.· Europe’s Group II supply holds steady in Sept 2023 as rise in the Netherlands’ base oils output balances out drop in imports from US..· Europe’s rising Group II supply contrasts with lower Group I supply, boosting incentive for blenders to use more premium-grade base oils in their formulations..· UK’s September base oils supply exceeds demand only slightly even with slump in exports..· Small surplus leaves UK market relatively balanced heading into Q4 2023, when demand typically faces seasonal slowdown at year-end..· Global base oils exports to Mideast Gulf hold firm in Sept 2023 on pick-up in shipments from Europe..· Shipments to Mideast Gulf surge almost 50pc yoy in first nine months of 2023.· Rise in shipments reflects surge in flows from Asia to meet rising regional demand.· Steady flows from Europe reflect that region’s tighter supply, curbing its ability to respond to rise in demand in Mideast Gulf.· Growing reliance of Mideast Gulf on supplies from Asia could cause complications if Asia’s surplus supply tightens.· Such a scenario is unlikely at end-2023/early 2024, more feasible later in Q1 2024 when Asia's lube demand gets seasonal boost..Americas/EMEA base oils - week of Dec 4: Demand outlook.Global base oils - week of Dec 4: Price outlook - margins.Global base oils - week of Dec 4: Price outlook - arbitrage.Global base oils - week of Dec 4: Demand outlook
· Base oils values hold firm vs diesel, boosting refiners’ incentive to maintain or increase output.· US base oils supply likely to face upward pressure amid seasonal slowdown in domestic demand, completion of plant maintenance work.· Trend boosts attraction for US refiners to sustain high exports to avoid a large supply-build at year-end, like last year.· Firm US Group II light-grade export price premium to heating oil gives refiners more leverage to cut outright prices to boost arbitrage opportunities.· Narrower US Group II heavy-grade export premium to light-grade prices points to ongoing surplus of heavy grades.· US set to take delivery of unusually large volume of supplies from South Korea in Dec 2023 amid signs some shipments were delayed from Nov 2023.· Delays leave US supplies from South Korea lower than usual in Nov 2023.· US supply enters Q4 2023 relatively balanced after supply falls in Sept 2023 yoy for fourth time in five months..· Lower supply in Q3 2023 helps to counter seasonal slowdown in US’ domestic demand.· Lower supply curbs build-up of surplus volumes and pressure to clear those volumes.· Mexico’s move in Oct 2023 to restrict base oils imports adds to benefit of lower US supply heading into Q4 2023..· Brazil’s October base oils output falls to lowest since mid-2020..· Sharp fall in Brazil's base oils output in 2H 2023 sustains strong demand for base oils supplies from overseas markets, especially the US.· Expected reversion of base oils output to more typical levels from end-2023/early 2024 could prompt reversion of Brazil’s base oils imports to more typical levels..· Europe’s Group I base oils supply shows signs of staying lower than usual.· Trend limits surplus supply at year-end.· Widening discount of US and Asia Group II prices to Europe prices points to more balanced supply in Europe and surplus volumes in US/Asia.· Europe’s Group II supply could get boost from any arbitrage shipments lined up from those markets.· Europe’s Group III base oils supply faces slowdown in shipments from within Europe over past month, and signs of lower volumes from Mideast Gulf.· Europe’s Group II supply holds steady in Sept 2023 as rise in the Netherlands’ base oils output balances out drop in imports from US..· Europe’s rising Group II supply contrasts with lower Group I supply, boosting incentive for blenders to use more premium-grade base oils in their formulations..· UK’s September base oils supply exceeds demand only slightly even with slump in exports..· Small surplus leaves UK market relatively balanced heading into Q4 2023, when demand typically faces seasonal slowdown at year-end..· Global base oils exports to Mideast Gulf hold firm in Sept 2023 on pick-up in shipments from Europe..· Shipments to Mideast Gulf surge almost 50pc yoy in first nine months of 2023.· Rise in shipments reflects surge in flows from Asia to meet rising regional demand.· Steady flows from Europe reflect that region’s tighter supply, curbing its ability to respond to rise in demand in Mideast Gulf.· Growing reliance of Mideast Gulf on supplies from Asia could cause complications if Asia’s surplus supply tightens.· Such a scenario is unlikely at end-2023/early 2024, more feasible later in Q1 2024 when Asia's lube demand gets seasonal boost..Americas/EMEA base oils - week of Dec 4: Demand outlook.Global base oils - week of Dec 4: Price outlook - margins.Global base oils - week of Dec 4: Price outlook - arbitrage.Global base oils - week of Dec 4: Demand outlook