· Crude oil prices correct lower after 20pc surge from end-June.· Diesel maintains higher-than-usual premium to crude even as crude prices slip – pointing to expectations of tight middle distillates supply in coming months.· Crude oil price downside likely limited amid tightening supply fundamentals, raising prospect of more rangebound prices over coming weeks.· Crude oil price upside likely limited on concern about protracted economic slowdown, signs of additional crude supply in some markets.· Lower crude oil prices ease base oil refiners’ feedstock cost pressures.· Lower crude oil prices incentivize base oil buyers in some markets to pause amid expectations that prices face less upward pressure.· Signs of healthy economic activity in US raise prospect of interest rates rising further or staying higher for longer.· China’s economic recovery lags expectations, raising prospect of lower-than-forecast consumption of everything from crude oil to lubricants and base oils.· China faces dilemma of balancing moves such as lower interest rates to spur economic activity with measures to slow currency’s depreciation.· Globally, lube blenders face challenge of balancing concern about demand outlook with prospect of holding low stocks ahead of seasonal pick-up in lube consumption in coming weeks, and as refiners’ squeezed margins incentivize run-cuts.· Blenders face challenge of more mixed outlook in different markets..· Global lube demand rises in May for first time in fourteen months on firmer consumption in Latin America and Asia..· Trend reflects more mixed demand dynamics, contrasts with some expectations that consumption will keep falling.· Those expectations prompted blenders to cut stocks and maintain lower inventories.· Any signs that demand is stronger than expected would coincide with seasonal pick-up in consumption over the coming weeks.· Any such trend would come at a time when blenders’ stocks are lower than usual.· Any such trend would come at a time when refiners’ usual supply-build in the third quarter of the year shows signs of being smaller than expected..Global base oils - week of Aug 21: Price outlook - margins
· Crude oil prices correct lower after 20pc surge from end-June.· Diesel maintains higher-than-usual premium to crude even as crude prices slip – pointing to expectations of tight middle distillates supply in coming months.· Crude oil price downside likely limited amid tightening supply fundamentals, raising prospect of more rangebound prices over coming weeks.· Crude oil price upside likely limited on concern about protracted economic slowdown, signs of additional crude supply in some markets.· Lower crude oil prices ease base oil refiners’ feedstock cost pressures.· Lower crude oil prices incentivize base oil buyers in some markets to pause amid expectations that prices face less upward pressure.· Signs of healthy economic activity in US raise prospect of interest rates rising further or staying higher for longer.· China’s economic recovery lags expectations, raising prospect of lower-than-forecast consumption of everything from crude oil to lubricants and base oils.· China faces dilemma of balancing moves such as lower interest rates to spur economic activity with measures to slow currency’s depreciation.· Globally, lube blenders face challenge of balancing concern about demand outlook with prospect of holding low stocks ahead of seasonal pick-up in lube consumption in coming weeks, and as refiners’ squeezed margins incentivize run-cuts.· Blenders face challenge of more mixed outlook in different markets..· Global lube demand rises in May for first time in fourteen months on firmer consumption in Latin America and Asia..· Trend reflects more mixed demand dynamics, contrasts with some expectations that consumption will keep falling.· Those expectations prompted blenders to cut stocks and maintain lower inventories.· Any signs that demand is stronger than expected would coincide with seasonal pick-up in consumption over the coming weeks.· Any such trend would come at a time when blenders’ stocks are lower than usual.· Any such trend would come at a time when refiners’ usual supply-build in the third quarter of the year shows signs of being smaller than expected..Global base oils - week of Aug 21: Price outlook - margins