· US base oils demand likely to trend lower amid lower crude oil prices, expectations of sufficient supply, seasonal slowdown.· Latin America’s base oils demand for US supplies likely to be more mixed amid firmer-than-expected finished lube demand, slower demand from Mexico.· US gasoline demand falls in 2H Oct for fourth week..· Latin America’s lube demand likely to fall less steeply in Q4 2023, rise less steeply in Q1 2024..· Steady-to-firm lube demand would add to attraction for US refiners to move more supplies to Latin America at a time of year when domestic demand is likely to be muted..· Mexico’s tighter rules on oil products imports raise prospect of curbing demand for US light-grade base oils.· US base oils exports to Mexico far exceeded the country’s requirements for lubricants production throughout this year.· Any slowdown in Mexico’s demand for US light-grade base oils would force sellers to secure alternative outlets in Latin America or in more distant markets like India.· Any such move would require base oil prices be at levels that make feasible the arbitrage to those markets..· Brazil’s September lube demand extends rise for fifth month on strong engine oils consumption..· Unusually strong rise in lube consumption set to sustain firm demand for base oils as blenders use up stocks faster. · Sustained rise in lube consumption set to absorb faster the build-up of Brazil's surplus base oils supplies in Q3 2023.· Rising surplus supplies coincided with and helped to cover requirements during round of base oil plant maintenance work in Brazil.· Sustained rise in Brazil’s consumption likely to cushion size of seasonal slowdown in Latin America’s lube demand during Q4 2023..· US’ August base oils exports to Latin America fall to nineteen-month low following surge in shipments during previous two months..· Larger-than-usual flows in June and July helped to keep US market more balanced.· Slowdown in August shipments highlights downside of larger-than-usual flows as buyers take time to consume larger stocks.· US refiners will likely need to maintain larger export volumes to Latin America over coming months to limit any supply-build at year-end.· Buyers in Latin America will likely need to procure more shipments from US in view of more limited arbitrage supplies from other regions this year compared with 2H 2022.· Trend highlights importance of keeping shut the arbitrage from other regions..· South Korea’s Q3 2023 base oils exports to Latin America fall more than 45pc from year-earlier levels amid more competitive US prices, smaller supply surplus in Asia..· Drop in shipments to Latin America leaves buyers in the region more reliant on supplies from US..· Europe’s lube demand forecast to fall less steeply at year-end and recover less steeply at start of new year..· Such a scenario could reflect blenders’ more balanced inventories this year vs 2H 2022.· Blenders' steadier procurement patterns would facilitate refiners’ plans to meet that demand over the coming months.· Europe’s lube demand already shows signs of falling more slowly during Q3 2023.· Trend could point to fall in demand bottoming out over coming months..· Italy’s September lube demand rises for fourth month on firm consumption of automobile and industrial oils..· Sustained rise in consumption boosts blenders’ need to and comfort with holding larger lubricants and feedstock inventories.· Italy’s sustained rise in lube consumption highlights diverging growth trends throughout Europe.· Slowdown in pace of Italy’s industrial oils demand growth coincided with signs of flatlining manufacturing activity in the country.· Overseas demand for Europe’s Group I supplies could get a boost from southeast Asia following permanent closure of Group I plant in Japan in Oct 2023.· Overseas demand for Europe’s Group I supplies from other markets likely to stay more muted as arbitrage stays shut..Global base oils - week of Oct 30: Price outlook - arbitrage
· US base oils demand likely to trend lower amid lower crude oil prices, expectations of sufficient supply, seasonal slowdown.· Latin America’s base oils demand for US supplies likely to be more mixed amid firmer-than-expected finished lube demand, slower demand from Mexico.· US gasoline demand falls in 2H Oct for fourth week..· Latin America’s lube demand likely to fall less steeply in Q4 2023, rise less steeply in Q1 2024..· Steady-to-firm lube demand would add to attraction for US refiners to move more supplies to Latin America at a time of year when domestic demand is likely to be muted..· Mexico’s tighter rules on oil products imports raise prospect of curbing demand for US light-grade base oils.· US base oils exports to Mexico far exceeded the country’s requirements for lubricants production throughout this year.· Any slowdown in Mexico’s demand for US light-grade base oils would force sellers to secure alternative outlets in Latin America or in more distant markets like India.· Any such move would require base oil prices be at levels that make feasible the arbitrage to those markets..· Brazil’s September lube demand extends rise for fifth month on strong engine oils consumption..· Unusually strong rise in lube consumption set to sustain firm demand for base oils as blenders use up stocks faster. · Sustained rise in lube consumption set to absorb faster the build-up of Brazil's surplus base oils supplies in Q3 2023.· Rising surplus supplies coincided with and helped to cover requirements during round of base oil plant maintenance work in Brazil.· Sustained rise in Brazil’s consumption likely to cushion size of seasonal slowdown in Latin America’s lube demand during Q4 2023..· US’ August base oils exports to Latin America fall to nineteen-month low following surge in shipments during previous two months..· Larger-than-usual flows in June and July helped to keep US market more balanced.· Slowdown in August shipments highlights downside of larger-than-usual flows as buyers take time to consume larger stocks.· US refiners will likely need to maintain larger export volumes to Latin America over coming months to limit any supply-build at year-end.· Buyers in Latin America will likely need to procure more shipments from US in view of more limited arbitrage supplies from other regions this year compared with 2H 2022.· Trend highlights importance of keeping shut the arbitrage from other regions..· South Korea’s Q3 2023 base oils exports to Latin America fall more than 45pc from year-earlier levels amid more competitive US prices, smaller supply surplus in Asia..· Drop in shipments to Latin America leaves buyers in the region more reliant on supplies from US..· Europe’s lube demand forecast to fall less steeply at year-end and recover less steeply at start of new year..· Such a scenario could reflect blenders’ more balanced inventories this year vs 2H 2022.· Blenders' steadier procurement patterns would facilitate refiners’ plans to meet that demand over the coming months.· Europe’s lube demand already shows signs of falling more slowly during Q3 2023.· Trend could point to fall in demand bottoming out over coming months..· Italy’s September lube demand rises for fourth month on firm consumption of automobile and industrial oils..· Sustained rise in consumption boosts blenders’ need to and comfort with holding larger lubricants and feedstock inventories.· Italy’s sustained rise in lube consumption highlights diverging growth trends throughout Europe.· Slowdown in pace of Italy’s industrial oils demand growth coincided with signs of flatlining manufacturing activity in the country.· Overseas demand for Europe’s Group I supplies could get a boost from southeast Asia following permanent closure of Group I plant in Japan in Oct 2023.· Overseas demand for Europe’s Group I supplies from other markets likely to stay more muted as arbitrage stays shut..Global base oils - week of Oct 30: Price outlook - arbitrage