· Global crude oil prices hold close to lowest in more than a month at a time of year when fuel demand typically gets a boost during the summer holidays.· Weaker gasoil and gasoline premiums to crude could incentivize refiners to trim run-rates, cutting crude oil demand.· Weak fuel margins and strong base oils margins incentivize refiners to boost base oils output.· Any such expectations, combined with lower crude prices and seasonal lull in demand, could prompt buyers to hold back.· Any drop in refinery run-rates to cut fuel output could conversely also impact base oils output.· Any subsequent drop in base oils output would coincide with signs of a more limited supply surplus in most key markets so far in Q3 2024.· Smaller-than-usual supply surplus for the time of year could incentivize buyers to lock in supplies earlier ahead of seasonal pick-up in consumption at end-Q3.· Asia-Pacific base oils demand could stay more muted for longer as buyers hold off in anticipation of lower prices.· Gap between FOB Asia and CFR India prices stays narrow, pointing to still-muted demand.· Delayed buying could prompt stronger pick-up in demand in a few weeks’ time, with a shorter time period before seasonal pick-up in lube consumption at end-Q3/early Q4 2024.· Europe’s base oils demand could differ from typical summer trend over coming weeks as buyers face tighter structural supply and hold lower inventories.· Competitive premium-grade prices relative to Group I base oils sustain incentive for blenders to maximise consumption of premium grades.· US base oils demand gets support from ongoing moves to build and hold larger stocks at a time when finished lube consumption faces seasonal slowdown.· Dynamic brings forward future demand.· Dynamic leaves buyers facing growing exposure to risk of change in price or of no change in supply fundamentals over the coming weeks.· That concern could prompt marked slowdown in demand once distributors/buyers are comfortable with inventory levels.· Latin America’s base oils demand for overseas supplies likely to hold firm amid tight supply-demand balance.· Demand for overseas supplies outside US could get additional support from preference to cut exposure to risk of disruption to US supplies..Global base oils margins outlook: Week of 29 July.Global base oils arb outlook: Week of 29 July.Asia base oils demand outlook: Week of 29 July
· Global crude oil prices hold close to lowest in more than a month at a time of year when fuel demand typically gets a boost during the summer holidays.· Weaker gasoil and gasoline premiums to crude could incentivize refiners to trim run-rates, cutting crude oil demand.· Weak fuel margins and strong base oils margins incentivize refiners to boost base oils output.· Any such expectations, combined with lower crude prices and seasonal lull in demand, could prompt buyers to hold back.· Any drop in refinery run-rates to cut fuel output could conversely also impact base oils output.· Any subsequent drop in base oils output would coincide with signs of a more limited supply surplus in most key markets so far in Q3 2024.· Smaller-than-usual supply surplus for the time of year could incentivize buyers to lock in supplies earlier ahead of seasonal pick-up in consumption at end-Q3.· Asia-Pacific base oils demand could stay more muted for longer as buyers hold off in anticipation of lower prices.· Gap between FOB Asia and CFR India prices stays narrow, pointing to still-muted demand.· Delayed buying could prompt stronger pick-up in demand in a few weeks’ time, with a shorter time period before seasonal pick-up in lube consumption at end-Q3/early Q4 2024.· Europe’s base oils demand could differ from typical summer trend over coming weeks as buyers face tighter structural supply and hold lower inventories.· Competitive premium-grade prices relative to Group I base oils sustain incentive for blenders to maximise consumption of premium grades.· US base oils demand gets support from ongoing moves to build and hold larger stocks at a time when finished lube consumption faces seasonal slowdown.· Dynamic brings forward future demand.· Dynamic leaves buyers facing growing exposure to risk of change in price or of no change in supply fundamentals over the coming weeks.· That concern could prompt marked slowdown in demand once distributors/buyers are comfortable with inventory levels.· Latin America’s base oils demand for overseas supplies likely to hold firm amid tight supply-demand balance.· Demand for overseas supplies outside US could get additional support from preference to cut exposure to risk of disruption to US supplies..Global base oils margins outlook: Week of 29 July.Global base oils arb outlook: Week of 29 July.Asia base oils demand outlook: Week of 29 July