· Global crude oil prices face sustained upward support amid concern about more widespread unrest in Middle East.· Those concerns outweigh for now market expectations of growing crude supply surplus in 2025.· Diesel premium to crude oil stays close to lowest in more than a year.· Higher crude oil prices could limit or slow expectations of downward pressure on base oils prices at a time of year when demand typically slows.· Refiners could hold off moves to adjust prices for several more weeks, when there should be more clarity about sustainability of recent surge in crude oil prices.· Even so, prospect of more limited downward pressure on base oils prices could ease concern about exposure to price volatility, supporting firmer demand.· Demand could get additional support from signs of smaller-than-expected surplus supplies in growing number of markets.· Smaller surplus gives refiners more leverage to adjust prices in response to recent squeeze in margins.· Asia’s base oils demand could be more mixed as smaller supply surplus and squeezed margins incentivize blenders to maintain steady procurement plans.· China’s Group II prices weaken relative to diesel and to FOB Asia cargo prices.· Any extension of that trend, along with higher domestic Group II supply, could point to slowdown in China’s demand after seasonal pick-up at end-Q3 2024.· India’s base oils demand could hold firm amid seasonal rise in consumption, tighter regional supply and prospect of more limited downward price pressure.· Europe’s base oils demand could get support from blenders’ strategy of procuring smaller volume more frequently.· Group I base oils demand could get boost from more competitive prices and prospect of tighter supply.· Any extension of recent weakness of Group I base oils prices relative to other grades could reflect structural shift towards increasing consumption of those other grades.· US base oils demand likely to stay muted as blenders focus on trimming inventory levels.· Higher feedstock costs and signs of smaller-than-expected supply surplus at start of Q4 2024 could incentivize blenders to maintain rather than hold off procurement plans.· Latin America’s base oils demand for US supplies likely to be smaller in Q4 2024 than same time last year.· Demand for US supplies could get boost from less feasible arbitrage to move shipments from Asia to Latin America..Global base oils margins outlook: Week of 14 Oct.Global base oils arb outlook: Week of 14 Oct.Asia base oils demand outlook: Week of 14 Oct
· Global crude oil prices face sustained upward support amid concern about more widespread unrest in Middle East.· Those concerns outweigh for now market expectations of growing crude supply surplus in 2025.· Diesel premium to crude oil stays close to lowest in more than a year.· Higher crude oil prices could limit or slow expectations of downward pressure on base oils prices at a time of year when demand typically slows.· Refiners could hold off moves to adjust prices for several more weeks, when there should be more clarity about sustainability of recent surge in crude oil prices.· Even so, prospect of more limited downward pressure on base oils prices could ease concern about exposure to price volatility, supporting firmer demand.· Demand could get additional support from signs of smaller-than-expected surplus supplies in growing number of markets.· Smaller surplus gives refiners more leverage to adjust prices in response to recent squeeze in margins.· Asia’s base oils demand could be more mixed as smaller supply surplus and squeezed margins incentivize blenders to maintain steady procurement plans.· China’s Group II prices weaken relative to diesel and to FOB Asia cargo prices.· Any extension of that trend, along with higher domestic Group II supply, could point to slowdown in China’s demand after seasonal pick-up at end-Q3 2024.· India’s base oils demand could hold firm amid seasonal rise in consumption, tighter regional supply and prospect of more limited downward price pressure.· Europe’s base oils demand could get support from blenders’ strategy of procuring smaller volume more frequently.· Group I base oils demand could get boost from more competitive prices and prospect of tighter supply.· Any extension of recent weakness of Group I base oils prices relative to other grades could reflect structural shift towards increasing consumption of those other grades.· US base oils demand likely to stay muted as blenders focus on trimming inventory levels.· Higher feedstock costs and signs of smaller-than-expected supply surplus at start of Q4 2024 could incentivize blenders to maintain rather than hold off procurement plans.· Latin America’s base oils demand for US supplies likely to be smaller in Q4 2024 than same time last year.· Demand for US supplies could get boost from less feasible arbitrage to move shipments from Asia to Latin America..Global base oils margins outlook: Week of 14 Oct.Global base oils arb outlook: Week of 14 Oct.Asia base oils demand outlook: Week of 14 Oct
