· Diesel prices extend rise vs crude to highest premium since start of year.· Rising diesel premium to crude contrasts with sliding base oils premium to VGO and especially to diesel.· Trend incentivizes Americas/Europe refiners to focus on maximising diesel production.· Americas market also likely to see fewer arbitrage shipments from Asia over coming months..· Surge in US base oils exports to Latin America in June and in Q2 2023 highlight impact of open arbitrage to the region and more rapid removal of surplus supplies from US market..· US exports to Latin American markets like Argentina show signs of staying higher than usual through Q3 2023.· Extension of trend contrasts with last year, when Latin American buyers secured more supplies from Asia-Pacific at expense of shipments from US..· Europe likely to face tightening Group I supply, especially if plant maintenance in Med market extends into September.· Europe’s Group III base oils supply likely to stay more plentiful.· Europe’s Group III base oils supply sees more prolonged slowdown in shipments from South Korea..· Europe’s Group III supply likely to remain plentiful despite slowdown in shipments from South Korea amid rise in flows from Spain and Mideast Gulf. · Europe’s imports of Group III/Group III+ base oils from the Mideast Gulf rise to ten-month high in June, show signs of staying high in July..· Sustained surge in Mideast Gulf shipments to Europe this year cover for regional Group III plant maintenance work in Q2 2023, raise prospect of adding to surplus in Q3 2023..· Rising flows from Mideast Gulf leave Europe’s Group III base oils supply relatively steady in June even as plant-maintenance work in Spain cuts exports from that market..· Plentiful Group III supply in Europe puts pressure on shipments from Mideast Gulf to target other markets..· Saudi Arabia’s August base oils exports show signs of recovering after sliding in July to their lowest in almost two years.· Slowdown in July cargoes, and shipment of most August cargoes to India, curb flows to other outlets like Europe, Africa and Asia.· Slowdown in shipments curbs further the size of typical supply-build in third quarter in markets like Europe and Asia..· China’s July base oils exports include record-high volume to Mideast Gulf and ongoing flows to Europe and Latin America..· China’s July base oils exports to UAE highlight open arbitrage from Asia to Mideast Gulf and closed arbitrage from Europe.· Trend reflects ongoing change in trade flows as markets adjust to tighter Group I supply in Europe..· Europe’s base oils exports to Nigeria rise strongly in 1H 2023 despite concern of tighter Group I supply in the region..· Rise in shipments suggests Europe’s Group I supply remains sufficient, partly because of higher supplies from Italy..· Europe’s Group I supply outpaces year-earlier levels in first five months of 2023, even with slump in imports from Russia..· Europe’s Group I supply likely to lag year-earlier levels from end-Q2 2023 as drop in imports from Russia coincides with fall in Italy’s supply for first time.· Italy’s June base oils output slumps to lowest in more than eight years..· Drop in Italy’s Group I supplies in Q2-Q3 2023 set to impact markets beyond Europe, likely to curb volume of supplies from Europe to Nigeria in Q3 2023..· Europe’s base oils exports fall in Q2 2023 to lowest since Q2 2020, when pandemic-related restrictions slashed trade activity..· Fall in Europe’s base oils exports partly reflects closed arbitrage, partly reflects more limited surplus supply.· Trend leaves opportunity for suppliers in other regions to cover markets that Europe previously covered..· Shipments from Qatar to key global outlets rise in Q2 2023 to second-highest level on record..· US and Asia take delivery of smaller volumes from Qatar in June; Europe takes delivery of larger volume.· Healthy premium-grade availability shows signs of extending into Q3 2023..· Rise in supplies from Qatar contrasts with sustained slowdown in shipments from UAE from year-earlier levels..· Drop in supplies could reflect response to more muted demand and downward price-pressure on Group III base oils..Global base oils - week of Aug 28: Price outlook - arbitrage
· Diesel prices extend rise vs crude to highest premium since start of year.· Rising diesel premium to crude contrasts with sliding base oils premium to VGO and especially to diesel.· Trend incentivizes Americas/Europe refiners to focus on maximising diesel production.· Americas market also likely to see fewer arbitrage shipments from Asia over coming months..· Surge in US base oils exports to Latin America in June and in Q2 2023 highlight impact of open arbitrage to the region and more rapid removal of surplus supplies from US market..· US exports to Latin American markets like Argentina show signs of staying higher than usual through Q3 2023.· Extension of trend contrasts with last year, when Latin American buyers secured more supplies from Asia-Pacific at expense of shipments from US..· Europe likely to face tightening Group I supply, especially if plant maintenance in Med market extends into September.· Europe’s Group III base oils supply likely to stay more plentiful.· Europe’s Group III base oils supply sees more prolonged slowdown in shipments from South Korea..· Europe’s Group III supply likely to remain plentiful despite slowdown in shipments from South Korea amid rise in flows from Spain and Mideast Gulf. · Europe’s imports of Group III/Group III+ base oils from the Mideast Gulf rise to ten-month high in June, show signs of staying high in July..· Sustained surge in Mideast Gulf shipments to Europe this year cover for regional Group III plant maintenance work in Q2 2023, raise prospect of adding to surplus in Q3 2023..· Rising flows from Mideast Gulf leave Europe’s Group III base oils supply relatively steady in June even as plant-maintenance work in Spain cuts exports from that market..· Plentiful Group III supply in Europe puts pressure on shipments from Mideast Gulf to target other markets..· Saudi Arabia’s August base oils exports show signs of recovering after sliding in July to their lowest in almost two years.· Slowdown in July cargoes, and shipment of most August cargoes to India, curb flows to other outlets like Europe, Africa and Asia.· Slowdown in shipments curbs further the size of typical supply-build in third quarter in markets like Europe and Asia..· China’s July base oils exports include record-high volume to Mideast Gulf and ongoing flows to Europe and Latin America..· China’s July base oils exports to UAE highlight open arbitrage from Asia to Mideast Gulf and closed arbitrage from Europe.· Trend reflects ongoing change in trade flows as markets adjust to tighter Group I supply in Europe..· Europe’s base oils exports to Nigeria rise strongly in 1H 2023 despite concern of tighter Group I supply in the region..· Rise in shipments suggests Europe’s Group I supply remains sufficient, partly because of higher supplies from Italy..· Europe’s Group I supply outpaces year-earlier levels in first five months of 2023, even with slump in imports from Russia..· Europe’s Group I supply likely to lag year-earlier levels from end-Q2 2023 as drop in imports from Russia coincides with fall in Italy’s supply for first time.· Italy’s June base oils output slumps to lowest in more than eight years..· Drop in Italy’s Group I supplies in Q2-Q3 2023 set to impact markets beyond Europe, likely to curb volume of supplies from Europe to Nigeria in Q3 2023..· Europe’s base oils exports fall in Q2 2023 to lowest since Q2 2020, when pandemic-related restrictions slashed trade activity..· Fall in Europe’s base oils exports partly reflects closed arbitrage, partly reflects more limited surplus supply.· Trend leaves opportunity for suppliers in other regions to cover markets that Europe previously covered..· Shipments from Qatar to key global outlets rise in Q2 2023 to second-highest level on record..· US and Asia take delivery of smaller volumes from Qatar in June; Europe takes delivery of larger volume.· Healthy premium-grade availability shows signs of extending into Q3 2023..· Rise in supplies from Qatar contrasts with sustained slowdown in shipments from UAE from year-earlier levels..· Drop in supplies could reflect response to more muted demand and downward price-pressure on Group III base oils..Global base oils - week of Aug 28: Price outlook - arbitrage