· Crude oil prices slide over past week as concern about global economic slowdown outweighs expectations of tightening crude oil supply.· Diesel premium to crude steadies at lowest since early 2022, raising prospect of refiners trimming crude oil requirements.· Falling crude prices add to lubricant blenders’ reluctance to build stocks even amid signs of smaller supply surplus.· Falling crude prices raise concern about further base oils price corrections, incentivizing buyers to hold back.· Major global lube blenders’ firmer Q1 profit vs Q4 reflects impact of price-increases and higher sales volumes.· Trend likely to extend into Q2 2023.· Trend suggests major global blenders were able to mitigate impact of slowdown in Q1 lube demand.· Blenders remain more comfortable with risk of procuring smaller volumes more regularly than of building stocks to guarantee security of supply.· Prospect of seasonal rise in lube demand in Europe, and blenders’ already-low stocks, could complicate the strategy.· Strategy may be more feasible in Americas, even with prospect of later-than-usual rise in demand, amid ongoing supply surplus.· Strategy may be more feasible in Asia, which faces prospect of slowdown in lube demand..Global base oils - week of May 8: Price outlook - arbitrage
· Crude oil prices slide over past week as concern about global economic slowdown outweighs expectations of tightening crude oil supply.· Diesel premium to crude steadies at lowest since early 2022, raising prospect of refiners trimming crude oil requirements.· Falling crude prices add to lubricant blenders’ reluctance to build stocks even amid signs of smaller supply surplus.· Falling crude prices raise concern about further base oils price corrections, incentivizing buyers to hold back.· Major global lube blenders’ firmer Q1 profit vs Q4 reflects impact of price-increases and higher sales volumes.· Trend likely to extend into Q2 2023.· Trend suggests major global blenders were able to mitigate impact of slowdown in Q1 lube demand.· Blenders remain more comfortable with risk of procuring smaller volumes more regularly than of building stocks to guarantee security of supply.· Prospect of seasonal rise in lube demand in Europe, and blenders’ already-low stocks, could complicate the strategy.· Strategy may be more feasible in Americas, even with prospect of later-than-usual rise in demand, amid ongoing supply surplus.· Strategy may be more feasible in Asia, which faces prospect of slowdown in lube demand..Global base oils - week of May 8: Price outlook - arbitrage
