· Oil prices struggle to sustain any recovery as prospect of global economic slowdown outweighs concern about tighter supply.· Diesel premium to crude edges higher from more-than-one-year-low in 2H April, stays weak amid concern about economic slowdown.· US Fed expected to raise interest rates further, even if it pauses on rate-increases in June, and to keep rates higher for longer in response to still-firm US economic activity.· Europe’s central bank expected to raise interest rates further this week.· Weak trade data and inflation in May add to signs of slowdown in China’s economic recovery.· Prospect of economic slowdown and seasonal dip in lube demand during summer months incentivize blenders to maintain lower stocks.· Signs of downward global base oils price-pressure, even with plant maintenance in all the key regions, raise expectations of sufficient supply and boost attraction for blenders to hold lower inventories.· Size of slowdown in demand so far this year suggests structural change in blenders’ inventory management as they work down surplus volumes.· Implementation of that structural change could have magnified slowdown in demand.· Blenders’ moves to hold smaller stocks suggests preference to hold lower inventories and to pay higher prices if required in case of unexpected supply tightness.· Demand likely to get support from more frequent procurement of smaller volumes to sustain lower stocks..Global base oils – week of June 12: Price outlook - margins
· Oil prices struggle to sustain any recovery as prospect of global economic slowdown outweighs concern about tighter supply.· Diesel premium to crude edges higher from more-than-one-year-low in 2H April, stays weak amid concern about economic slowdown.· US Fed expected to raise interest rates further, even if it pauses on rate-increases in June, and to keep rates higher for longer in response to still-firm US economic activity.· Europe’s central bank expected to raise interest rates further this week.· Weak trade data and inflation in May add to signs of slowdown in China’s economic recovery.· Prospect of economic slowdown and seasonal dip in lube demand during summer months incentivize blenders to maintain lower stocks.· Signs of downward global base oils price-pressure, even with plant maintenance in all the key regions, raise expectations of sufficient supply and boost attraction for blenders to hold lower inventories.· Size of slowdown in demand so far this year suggests structural change in blenders’ inventory management as they work down surplus volumes.· Implementation of that structural change could have magnified slowdown in demand.· Blenders’ moves to hold smaller stocks suggests preference to hold lower inventories and to pay higher prices if required in case of unexpected supply tightness.· Demand likely to get support from more frequent procurement of smaller volumes to sustain lower stocks..Global base oils – week of June 12: Price outlook - margins