· Global crude oil prices hold close to lowest in more than a month at a time of year when fuel demand typically gets a boost during the summer holidays.

· Weaker gasoil and gasoline premiums to crude could incentivize refiners to trim run-rates, cutting crude oil demand.

· Weak fuel margins and strong base oils margins incentivize refiners to boost base oils output.

· Any such expectations, combined with lower crude prices and seasonal lull in demand, could prompt buyers to hold back.

· Any drop in refinery run-rates to cut fuel output could conversely also impact base oils output.

· Any subsequent drop in base oils output would coincide with signs of a more limited supply surplus in most key markets so far in Q3 2024.

· Smaller-than-usual supply surplus for the time of year could incentivize buyers to lock in supplies earlier ahead of seasonal pick-up in consumption at end-Q3.

· Asia-Pacific base oils demand could stay more muted for longer as buyers hold off in anticipation of lower prices.

· Gap between FOB Asia and CFR India prices stays narrow, pointing to still-muted demand.

· Delayed buying could prompt stronger pick-up in demand in a few weeks’ time, with a shorter time period before seasonal pick-up in lube consumption at end-Q3/early Q4 2024.

· Europe’s base oils demand could differ from typical summer trend over coming weeks as buyers face tighter structural supply and hold lower inventories.

· Competitive premium-grade prices relative to Group I base oils sustain incentive for blenders to maximise consumption of premium grades.

· US base oils demand gets support from ongoing moves to build and hold larger stocks at a time when finished lube consumption faces seasonal slowdown.

· Dynamic brings forward future demand.

· Dynamic leaves buyers facing growing exposure to risk of change in price or of no change in supply fundamentals over the coming weeks.

· That concern could prompt marked slowdown in demand once distributors/buyers are comfortable with inventory levels.

· Latin America’s base oils demand for overseas supplies likely to hold firm amid tight supply-demand balance.

· Demand for overseas supplies outside US could get additional support from preference to cut exposure to risk of disruption to US supplies.

Mexico’s Feb lube demand holds firm

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