· Global base oils prices mostly hold firm versus feedstock/competing fuel prices, ICIS data shows.
· Firm base oils values incentivize refiners to maintain or raise output.
· Any moves to maintain or raise output would coincide with seasonal slowdown in demand at start of new year.
· Any moves to maintain or raise output point either to prospect of growing supply-build, or to tighter-than-usual supply-demand fundamentals at start of new year.
· Fob Asia Group I price premium to regional gasoil prices holds firm close to six-month high.
· Premium holds firm at a time when regional supply is tighter than usual for the time of year.
· Fob Asia Group II price premium to regional gasoil prices steadies after falling steadily in month to 2H Dec 2023.
· Fob Asia Group II premium holds well above lows of Q3 2023 at levels that likely limit incentive to raise output any further.
· Fob Asia Group II light-grade premium holds relatively firm vs gasoil; heavy-grade premium stays relatively narrow vs gasoil and narrower than Group I heavy-grade premiums to gasoil.
· China’s domestic Group II light-grade premium to Shandong diesel prices holds firm close to six-month high, similar to year-earlier levels.
· Premium holds firm even amid signs of plentiful domestic base oils supply in China’s domestic market.
· Firm base oils premium and plentiful supply point to firmer demand.
· In 2023, China’s Group II light-grade premium to diesel saw sharp rise through to mid-April before sliding.
· Cfr India Group II N70 premium to regional gasoil prices steadies after falling more than $100/t in month to 2H Dec 2023.
· N70 premium falls to levels that cut attraction for Asia refiners to produce additional volumes to move to India.
· Europe’s domestic Group I/II price premium to gasoil continues to trend upwards; Group III premium stays rangebound in Q4 2023.
· Europe’s domestic Group II light-grade price premium to VGO rises more strongly than Group I and Group III over past month.
· Europe’s domestic Group III (low) 4cst premium to VGO averages more than $860/t in Q4 2023.
· Group III premium in Q4 2023 falls from more than $1,050/t in Q3 2023 and more than $950/t in 2022. Premium stays well above levels before 2021.
· US Group II export light-grade differential to heating oil extends slide, dipping more than $180/t since mid-Nov 2023.
· US Group II export heavy-grade premium to heating oil steadies after falling more than $400/t since 2H Oct 2023.
· Steep fall in export-price differential to heating oil/VGO cuts attraction of producing supplies for export markets.
· US Group II domestic price premium to VGO holds steadier and at increasingly steep premium to export-price premium.
· Firm domestic price premium to VGO incentivizes refiners to maintain/raise production at a time when demand faces seasonal slowdown.
· US posted price premium to VGO holds firm, incentivizing refiners to maintain/raise output.
