· Diesel price premium to crude oil holds at levels that incentivize refiners to focus on producing more middle distillates.· US base oils price premium to heating oil/VGO stays low vs levels over past year, well above levels in mid-Sep 2023.· Recent recovery in price premium could curb incentive to trim base oils run-rates.· US Group I base oils supply likely to stay tighter amid plant maintenance work.· US Group II base oils supply could trend higher amid lack of scheduled plant maintenance work.· US Group III base oils imports show signs of rising in Sep 2023 from previous month, before slowing in Oct 2023. .· US’ August base oils exports fall to six-month low on dip in shipments from Mobile, Alabama and Port Arthur, Texas..· Drop in shipments contrasts with surge in exports this year that cushioned impact of lower domestic demand.· Drop in August exports could reflect tighter domestic supply at a time when base oils margins were unusually weak. · Drop in August exports could reflect firmer-than-usual domestic demand as higher posted prices incentivized blenders to replenish stocks before higher prices came into effect.· Either way, drop in August exports increased importance of US’ domestic market in limiting size of any supply-build.· Several cargoes load from US in September bound for North/West Africa, suggesting refiners continue to focus on both export and domestic markets to manage supply..· US’ August base oils exports to Europe slump, extending pattern of sharp rise then fall in shipments to Europe every month since April.· Trend shows signs of extending into September amid signs of pick-up in US shipments to Europe.· US exports to Europe fall so far in 2023 even with volatile flows..· Trend helps to maintain more balanced premium-grade supplies in Europe so far this year.· Trend relies on pick-up in shipments to other regions like Latin America.· Trend likely to continue while demand in Europe stays weak and arbitrage from Asia to Americas stays more limited than last year..· Americas’ July base oils output rises on higher production in US and Latin America..· Any extension of that trend would put pressure on regional lube demand to keep pace, especially as higher US prices make arbitrage less feasible to outlets like India..· Europe’s Group I base oils supply likely to improve on closed arbitrage, recovery in Italy supplies.· Improvement in Europe’s Group I base oils prices vs gasoil/VGO over past month ease pressure on refiners to cut production.· Europe’s Group II base oils supply shows signs of slowdown in shipments from US in October.· Still-weak Europe Group II prices vs VGO maintain incentive for refiners to focus on boosting output of other products like diesel.· Europe’s Group III base oils supply from Mideast Gulf shows signs of improving in Oct 2023 vs previous month..· Turkey’s base oils supply rises sharply in 2023 amid rising imports and domestic base oils production.· Rising base oils supply coincides with slowing economic growth, high inflation and high interest rates.· Rising supply and signs of slower demand raise prospect of pick-up in Turkey’s base oils exports or drop in imports or domestic production over coming months.· Turkey’s exports of premium-grade base oils surge since June 2023, despite country’s lack of premium-grade production capacity.· Destinations for premium-grade supplies from Turkey include Nigeria, Spain and US.· Average price of premium-grade exports is at steep discount to price of Group I base oils exports.· Price suggests the exports are unlikely to be conventional premium-grade base oils..Global base oils - week of Oct 16: Demand outlook
· Diesel price premium to crude oil holds at levels that incentivize refiners to focus on producing more middle distillates.· US base oils price premium to heating oil/VGO stays low vs levels over past year, well above levels in mid-Sep 2023.· Recent recovery in price premium could curb incentive to trim base oils run-rates.· US Group I base oils supply likely to stay tighter amid plant maintenance work.· US Group II base oils supply could trend higher amid lack of scheduled plant maintenance work.· US Group III base oils imports show signs of rising in Sep 2023 from previous month, before slowing in Oct 2023. .· US’ August base oils exports fall to six-month low on dip in shipments from Mobile, Alabama and Port Arthur, Texas..· Drop in shipments contrasts with surge in exports this year that cushioned impact of lower domestic demand.· Drop in August exports could reflect tighter domestic supply at a time when base oils margins were unusually weak. · Drop in August exports could reflect firmer-than-usual domestic demand as higher posted prices incentivized blenders to replenish stocks before higher prices came into effect.· Either way, drop in August exports increased importance of US’ domestic market in limiting size of any supply-build.· Several cargoes load from US in September bound for North/West Africa, suggesting refiners continue to focus on both export and domestic markets to manage supply..· US’ August base oils exports to Europe slump, extending pattern of sharp rise then fall in shipments to Europe every month since April.· Trend shows signs of extending into September amid signs of pick-up in US shipments to Europe.· US exports to Europe fall so far in 2023 even with volatile flows..· Trend helps to maintain more balanced premium-grade supplies in Europe so far this year.· Trend relies on pick-up in shipments to other regions like Latin America.· Trend likely to continue while demand in Europe stays weak and arbitrage from Asia to Americas stays more limited than last year..· Americas’ July base oils output rises on higher production in US and Latin America..· Any extension of that trend would put pressure on regional lube demand to keep pace, especially as higher US prices make arbitrage less feasible to outlets like India..· Europe’s Group I base oils supply likely to improve on closed arbitrage, recovery in Italy supplies.· Improvement in Europe’s Group I base oils prices vs gasoil/VGO over past month ease pressure on refiners to cut production.· Europe’s Group II base oils supply shows signs of slowdown in shipments from US in October.· Still-weak Europe Group II prices vs VGO maintain incentive for refiners to focus on boosting output of other products like diesel.· Europe’s Group III base oils supply from Mideast Gulf shows signs of improving in Oct 2023 vs previous month..· Turkey’s base oils supply rises sharply in 2023 amid rising imports and domestic base oils production.· Rising base oils supply coincides with slowing economic growth, high inflation and high interest rates.· Rising supply and signs of slower demand raise prospect of pick-up in Turkey’s base oils exports or drop in imports or domestic production over coming months.· Turkey’s exports of premium-grade base oils surge since June 2023, despite country’s lack of premium-grade production capacity.· Destinations for premium-grade supplies from Turkey include Nigeria, Spain and US.· Average price of premium-grade exports is at steep discount to price of Group I base oils exports.· Price suggests the exports are unlikely to be conventional premium-grade base oils..Global base oils - week of Oct 16: Demand outlook
