· US flash April purchasing managers’ index points to healthy growth, contrasting with recent signs of slowing economic activity.· US interest rates expected to be raised one more time in May, before pausing.· US gasoline consumption rises last week for fourth week..· Signs of blenders’ moves to hold lower stocks assumes steady availability of supply.· This assumption is riskier during Atlantic hurricane season, which officially begins at beginning of June.· Refiners responding to steadier, more gradual demand would take time to readjust output to cover sudden rise in demand.· US posted price cuts could boost demand from blenders that had held back on concern about exposure to such a price-cut.· Americas lube demand growth outpaces supply at start of year for sixth month amid steady consumption in Latin America.· Steady monthly demand in Latin America contrasts with sharper monthly changes in US consumption, complicating refiners’ ability to maintain stable supply/stocks.· Sustained rise in Latin Americas' automobile sales in March points to ongoing underlying support for regional lube demand..· Latin American buyers continue to tap Asia suppliers for Group II heavy grades.· Trend reflects more the still-competitive Asia-Pacific prices vs US prices rather than unusual rise in heavy-grade demand.· Europe’s flash April services PMI extends rises; manufacturing PMI falls.· Diverging performance of services and manufacturing extends recent trend, supporting PCMO consumption.· France’s firm PCMO demand in February illustrates that trend, mirrors other markets in Europe and in other regions..· Europe and UK expected to raise interest rates again in May as core inflation stays high.· Europe’s March car sales extend rise, led by surging alternative-fuel-vehicle sales.· France’s February lube demand falls, contrasting with steadier consumption in other markets.· Muted demand and uncertainty about outlook reinforces blenders’ preference to hold lower inventories.· Europe’s shrinking lube demand early this year contrasts with firm growth in Americas and Asia-Pacific..· Europe’s lube demand likely to get seasonal boost in coming months, later than usual, and after Asia.· Rise in Europe’s demand typically coincides with Asia demand peaking around end of Q1.· Simultaneous rise in demand typically magnifies impact on prices.· Rise in Europe’s demand this year likely to take place after Asia demand peaks.· Seasonal rise in demand at different times in Europe and Asia likely to curb price-impact of stronger demand.· Base oils prices still likely to reflect different demand dynamics at different times in the Asia and European markets.· West African markets like Nigeria and Senegal secure more regular supplies from sources like UK, Italy, US, countering slowdown in shipments from Russia.· More regular flows to Africa reflect persistent surplus in those markets.· West Africa buyers face risk of slowdown in shipments if supply tightens in those markets.· Risk may be even larger for suppliers if West Africa buyers line up supplies from other sources instead.· Relative risk to suppliers reflects current structural oversupply in global base oils market and need for regular outlets to clear surplus volumes.· Nigeria continues to take delivery of shipments from different regions, despite financing difficulties.· Shipments suggest lack of Russian base oils cargoes to Nigeria reflect other factors that complicate such flows..Global base oils - week of April 24: Demand outlook
· US flash April purchasing managers’ index points to healthy growth, contrasting with recent signs of slowing economic activity.· US interest rates expected to be raised one more time in May, before pausing.· US gasoline consumption rises last week for fourth week..· Signs of blenders’ moves to hold lower stocks assumes steady availability of supply.· This assumption is riskier during Atlantic hurricane season, which officially begins at beginning of June.· Refiners responding to steadier, more gradual demand would take time to readjust output to cover sudden rise in demand.· US posted price cuts could boost demand from blenders that had held back on concern about exposure to such a price-cut.· Americas lube demand growth outpaces supply at start of year for sixth month amid steady consumption in Latin America.· Steady monthly demand in Latin America contrasts with sharper monthly changes in US consumption, complicating refiners’ ability to maintain stable supply/stocks.· Sustained rise in Latin Americas' automobile sales in March points to ongoing underlying support for regional lube demand..· Latin American buyers continue to tap Asia suppliers for Group II heavy grades.· Trend reflects more the still-competitive Asia-Pacific prices vs US prices rather than unusual rise in heavy-grade demand.· Europe’s flash April services PMI extends rises; manufacturing PMI falls.· Diverging performance of services and manufacturing extends recent trend, supporting PCMO consumption.· France’s firm PCMO demand in February illustrates that trend, mirrors other markets in Europe and in other regions..· Europe and UK expected to raise interest rates again in May as core inflation stays high.· Europe’s March car sales extend rise, led by surging alternative-fuel-vehicle sales.· France’s February lube demand falls, contrasting with steadier consumption in other markets.· Muted demand and uncertainty about outlook reinforces blenders’ preference to hold lower inventories.· Europe’s shrinking lube demand early this year contrasts with firm growth in Americas and Asia-Pacific..· Europe’s lube demand likely to get seasonal boost in coming months, later than usual, and after Asia.· Rise in Europe’s demand typically coincides with Asia demand peaking around end of Q1.· Simultaneous rise in demand typically magnifies impact on prices.· Rise in Europe’s demand this year likely to take place after Asia demand peaks.· Seasonal rise in demand at different times in Europe and Asia likely to curb price-impact of stronger demand.· Base oils prices still likely to reflect different demand dynamics at different times in the Asia and European markets.· West African markets like Nigeria and Senegal secure more regular supplies from sources like UK, Italy, US, countering slowdown in shipments from Russia.· More regular flows to Africa reflect persistent surplus in those markets.· West Africa buyers face risk of slowdown in shipments if supply tightens in those markets.· Risk may be even larger for suppliers if West Africa buyers line up supplies from other sources instead.· Relative risk to suppliers reflects current structural oversupply in global base oils market and need for regular outlets to clear surplus volumes.· Nigeria continues to take delivery of shipments from different regions, despite financing difficulties.· Shipments suggest lack of Russian base oils cargoes to Nigeria reflect other factors that complicate such flows..Global base oils - week of April 24: Demand outlook