· Global base oils values hold firm versus feedstock/competing fuel prices at end-2023/early 2024, ICIS data shows..· Base oils values hold firm at a time of year when they usually face downward pressure because of weaker supply-demand fundamentals.· Expectations of downward price pressure usually add to buyers’ preference to hold off in first few weeks of January each year, compounding demand weakness.· Signs of steadier supply-demand fundamentals could limit downward pressure on base oils values at start of 2024.· Signs of steadier base oils values could in turn add to support for an earlier recovery in demand during Q1 2024.· Lube demand in key global markets likely to rise in Q1 2024 from Q4 2023, following slide in Q4 demand from Q3 2023..· Lube demand in Asia, Europe and Latin America combined is forecast to rise by more than 300,000t in Q1 2024 vs Q4 2023.· Lube demand in those markets rose by almost 310,000t in Q1 2023 vs Q4 2022.· Blenders slashed high base oils stocks from 2H 2022, cutting impact of rise in lube demand in Q1 2023 from Q4 2022.· Blenders held lower base oils stocks at end-2023.· Blenders’ lower stocks raise prospect of increasing the impact of likely rise in lube demand in Q1 2024 from Q4 2023..· Build-up of surplus global base oils supply shows signs of being smaller in Q4 2023 vs Q4 2022.· Arbitrage to move Group I cargoes from Asia/Europe to India/Mideast Gulf stays hard to work in recent weeks, reflecting tighter regional supply..· Arbitrage to move Group II cargoes from US to India stays easier to work..· Open arbitrage reflects signs of surplus US supply, as well as prices that make feasible the removal of the volumes from the US.· Prospect of smaller global supply surplus at start of 2024 would coincide with likelihood of stronger impact of seasonal recovery in lube demand.· Combination of those supply-demand dynamics would contrast with start of 2023, when base oils values slumped versus VGO/gasoil in first few weeks of the year..Global base oils - week of Jan 8: Price outlook - margins
· Global base oils values hold firm versus feedstock/competing fuel prices at end-2023/early 2024, ICIS data shows..· Base oils values hold firm at a time of year when they usually face downward pressure because of weaker supply-demand fundamentals.· Expectations of downward price pressure usually add to buyers’ preference to hold off in first few weeks of January each year, compounding demand weakness.· Signs of steadier supply-demand fundamentals could limit downward pressure on base oils values at start of 2024.· Signs of steadier base oils values could in turn add to support for an earlier recovery in demand during Q1 2024.· Lube demand in key global markets likely to rise in Q1 2024 from Q4 2023, following slide in Q4 demand from Q3 2023..· Lube demand in Asia, Europe and Latin America combined is forecast to rise by more than 300,000t in Q1 2024 vs Q4 2023.· Lube demand in those markets rose by almost 310,000t in Q1 2023 vs Q4 2022.· Blenders slashed high base oils stocks from 2H 2022, cutting impact of rise in lube demand in Q1 2023 from Q4 2022.· Blenders held lower base oils stocks at end-2023.· Blenders’ lower stocks raise prospect of increasing the impact of likely rise in lube demand in Q1 2024 from Q4 2023..· Build-up of surplus global base oils supply shows signs of being smaller in Q4 2023 vs Q4 2022.· Arbitrage to move Group I cargoes from Asia/Europe to India/Mideast Gulf stays hard to work in recent weeks, reflecting tighter regional supply..· Arbitrage to move Group II cargoes from US to India stays easier to work..· Open arbitrage reflects signs of surplus US supply, as well as prices that make feasible the removal of the volumes from the US.· Prospect of smaller global supply surplus at start of 2024 would coincide with likelihood of stronger impact of seasonal recovery in lube demand.· Combination of those supply-demand dynamics would contrast with start of 2023, when base oils values slumped versus VGO/gasoil in first few weeks of the year..Global base oils - week of Jan 8: Price outlook - margins
