· US base oils demand set to slow over coming weeks as blenders prepare for seasonal dip in lube consumption at year-end..· US gasoline demand falls in mid-October for third week..· US base oil posted prices face little pressure for any further upward adjustments for now, curbing incentive for blenders to procure additional supplies.· US Group II posted prices hold firm vs heating oil/VGO, supporting steady prices.· US Group II posted price premium to domestic spot prices stays wider than usual, curbing further prospect of any rise in prices.· Latin America’s base oils demand likely to be mixed.· Mexico’s finished lube demand falls in August for fourth month on slide in automobile lube consumption..· Lower demand coincides with slower consumption in other markets like Argentina and Chile.· Weaker demand set to face additional pressure from seasonal slowdown in consumption in fourth quarter.· Latin America’s lube demand still rises in August on back of unusually strong consumption in Brazil..· Trend increases importance of extended strength in Brazil’s market to limit seasonal dip in regional consumption over coming months.· Weaker demand in growing number of other markets in Latin America could complicate region’s ability to absorb surplus supplies from other regions..· US’ August base oils exports to Mexico stay unusually high, far outpace country’s slowing lube consumption..· Large share of surplus volumes likely used as fuel-extender.· Trend provides US refiners with valuable outlet for surplus light-grade base oils.· Trend more feasible when US export base oil prices are similar to or at a discount to heating oil prices.· Rebounding heating oil prices in recent weeks likely to sustain attraction of procurement of base oils for Mexico's fuel-extender market.· Brazil’s outright base oils demand likely to get support from firm lube consumption.· Brazil’s demand for base oils from overseas sources likely to be more muted after build-up of stocks ahead of/during plant maintenance work..· Europe’s base oils demand likely to stay muted amid expectations of sufficient supply, seasonal slowdown in lube consumption.· Europe’s Group III base oils imports from Mideast Gulf rebound in August, extending steady rise in shipments from the region..· Imports rise even in face of increasingly weak Europe Group III base oils values.· Rise in imports compounds pressure on prices.· Rise in imports suggests refiners’ margins remain attractive enough and that they also face weak demand in other markets..· Europe’s August base oils exports to Nigeria recover after pause in July, stay lower than usual.· Low volumes compound fall in global base oils exports to Nigeria in August to ten-month low..· Seasonal slowdown in lube demand in Nigeria in Q3 2023 cushions impact of drop in supplies.· Slump in shipments still increases need for Nigerian buyers to replenish depleted stocks after rainy season.· Trend incentivizes Nigerian buyers to diversify their sources of base oils supplies beyond Europe and US.· Nigerian buyers line up growing volume of shipments from other markets instead, including Saudi Arabia.· Buyers likely to remain interested in any surplus supplies from Europe at year-end.· But diversification of supply sources would put more pressure on any European supplies to be at competitive prices versus alternative shipments..· Revival in global base oils imports from Qatar in August include strong rebound in supplies to Asia and Europe and dip in shipments to US..· Qatar’s shipments to Europe exceed shipments to US in August for second time in three months. Shipments to US typically far exceed flows to Europe.· Any extension of slowdown in flows to US and any further recovery in shipments from Qatar would leave other regions absorbing even larger share of the supplies..Global base oils - week of Oct 23: Price signals - arbitrage
· US base oils demand set to slow over coming weeks as blenders prepare for seasonal dip in lube consumption at year-end..· US gasoline demand falls in mid-October for third week..· US base oil posted prices face little pressure for any further upward adjustments for now, curbing incentive for blenders to procure additional supplies.· US Group II posted prices hold firm vs heating oil/VGO, supporting steady prices.· US Group II posted price premium to domestic spot prices stays wider than usual, curbing further prospect of any rise in prices.· Latin America’s base oils demand likely to be mixed.· Mexico’s finished lube demand falls in August for fourth month on slide in automobile lube consumption..· Lower demand coincides with slower consumption in other markets like Argentina and Chile.· Weaker demand set to face additional pressure from seasonal slowdown in consumption in fourth quarter.· Latin America’s lube demand still rises in August on back of unusually strong consumption in Brazil..· Trend increases importance of extended strength in Brazil’s market to limit seasonal dip in regional consumption over coming months.· Weaker demand in growing number of other markets in Latin America could complicate region’s ability to absorb surplus supplies from other regions..· US’ August base oils exports to Mexico stay unusually high, far outpace country’s slowing lube consumption..· Large share of surplus volumes likely used as fuel-extender.· Trend provides US refiners with valuable outlet for surplus light-grade base oils.· Trend more feasible when US export base oil prices are similar to or at a discount to heating oil prices.· Rebounding heating oil prices in recent weeks likely to sustain attraction of procurement of base oils for Mexico's fuel-extender market.· Brazil’s outright base oils demand likely to get support from firm lube consumption.· Brazil’s demand for base oils from overseas sources likely to be more muted after build-up of stocks ahead of/during plant maintenance work..· Europe’s base oils demand likely to stay muted amid expectations of sufficient supply, seasonal slowdown in lube consumption.· Europe’s Group III base oils imports from Mideast Gulf rebound in August, extending steady rise in shipments from the region..· Imports rise even in face of increasingly weak Europe Group III base oils values.· Rise in imports compounds pressure on prices.· Rise in imports suggests refiners’ margins remain attractive enough and that they also face weak demand in other markets..· Europe’s August base oils exports to Nigeria recover after pause in July, stay lower than usual.· Low volumes compound fall in global base oils exports to Nigeria in August to ten-month low..· Seasonal slowdown in lube demand in Nigeria in Q3 2023 cushions impact of drop in supplies.· Slump in shipments still increases need for Nigerian buyers to replenish depleted stocks after rainy season.· Trend incentivizes Nigerian buyers to diversify their sources of base oils supplies beyond Europe and US.· Nigerian buyers line up growing volume of shipments from other markets instead, including Saudi Arabia.· Buyers likely to remain interested in any surplus supplies from Europe at year-end.· But diversification of supply sources would put more pressure on any European supplies to be at competitive prices versus alternative shipments..· Revival in global base oils imports from Qatar in August include strong rebound in supplies to Asia and Europe and dip in shipments to US..· Qatar’s shipments to Europe exceed shipments to US in August for second time in three months. Shipments to US typically far exceed flows to Europe.· Any extension of slowdown in flows to US and any further recovery in shipments from Qatar would leave other regions absorbing even larger share of the supplies..Global base oils - week of Oct 23: Price signals - arbitrage
