· Diesel price premium to crude holds at lowest in more than two months, even if still much higher than historical levels.· Lower outright diesel prices contrast with steady/firm base oils prices.· Trend cuts incentive for refiners to redirect surplus base oils/feedstock supplies back into diesel pool.· Any subsequent pick-up in supply would coincide with seasonal slowdown in demand.· US Group II supply already likely to trend higher amid limited plant maintenance work in Q4 2023.· Group I supply in Americas likely to stay tighter because of plant maintenance work.· Firm US Group I prices relative to other markets show signs of attracting supplies from European region..· US’ July base oils output stays lower than usual even as it rises from June.· Lower-than-usual output coincides with slowdown in base oils imports, capping rise in US’ total supply..· Muted rise leaves supply lagging demand for sixth time in seven months and US base oils stocks falling to eleven-month low..· Drop in supply and stocks at start of Q3 2023 eases concern about supply-build amid seasonal slowdown in demand.· Tighter supply gives refiners more leverage to raise prices in response to squeezed margins.· US refiners duly raised posted prices in August 2023..· Argentina’s August base oils supply falls to seventeen-month low on lower domestic output and imports..· Drop in output and imports gives market time to absorb surge in supplies in June and July, easing prospect of large build-up of surplus volumes.· Country likely to need to rely more on domestic production to cover Group I requirements amid dearth of arbitrage shipments compared with same time last year.· Slowing domestic lube demand boosts attraction for buyers to tap supplies from domestic sources by shortening time between procurement and delivery of supplies.· Less feasible arbitrage leaves Argentina more reliant on US to cover requirements from overseas suppliers..· Surplus Group I base oils supply around Europe shows signs of improving amid pick-up in flows from Italy, Turkey and Algeria.· Flow of Group II supplies from US to Europe shows signs of slowing in recent weeks after surge in shipments in early Sep 2023.· Flow of Group III supplies from Mideast Gulf reaching Europe shows signs of rising strongly in Oct 2023 after slowdown in Sep 2023.· Europe’s July Group I base oils supply stays lower than usual even as it recovers from June..· Tighter supply coincides with lower Group I base oils values versus diesel during Q3 2023, ICIS data shows.· Trend points to weak regional demand during that period.· Trend suggests prices would have faced even more pressure if supply had been higher.· Trend raises prospect of prices facing more pressure if supply rises and demand stays weak..· Europe’s July base oils supply from regional markets and from imports from other regions rises from June but stays lower than usual..· Total supply stays lower as slide in imports counters pick-up in regional supply.· Lower supply cushions impact of seasonal slowdown in regional demand.· Trend would need to continue to sustain supply-demand balance..· Netherlands’ July base oils supply rises to three-month high on higher domestic output..· Supply falls from year-earlier levels as slump in imports outweighs higher domestic output.· Drop in imports puts pressure on overseas suppliers to redirect shipments to other markets.· Trend likely to continue while Netherlands’ domestic output stays high..· Netherlands’ July supply exceeds demand for first time in three months, triggering rise in stocks to three-year high..· Rising supply adds to signs of recovery in Europe’s base oils supply in Q3 2023 following slump in output at end-Q2 2023..· Europe’s Group II base oils account for largest share of region’s base oils supply in July for first time..· Trend likely to continue as Group I market share shrinks..Global base oils - week of Oct 9: Price outlook - arbitrage
· Diesel price premium to crude holds at lowest in more than two months, even if still much higher than historical levels.· Lower outright diesel prices contrast with steady/firm base oils prices.· Trend cuts incentive for refiners to redirect surplus base oils/feedstock supplies back into diesel pool.· Any subsequent pick-up in supply would coincide with seasonal slowdown in demand.· US Group II supply already likely to trend higher amid limited plant maintenance work in Q4 2023.· Group I supply in Americas likely to stay tighter because of plant maintenance work.· Firm US Group I prices relative to other markets show signs of attracting supplies from European region..· US’ July base oils output stays lower than usual even as it rises from June.· Lower-than-usual output coincides with slowdown in base oils imports, capping rise in US’ total supply..· Muted rise leaves supply lagging demand for sixth time in seven months and US base oils stocks falling to eleven-month low..· Drop in supply and stocks at start of Q3 2023 eases concern about supply-build amid seasonal slowdown in demand.· Tighter supply gives refiners more leverage to raise prices in response to squeezed margins.· US refiners duly raised posted prices in August 2023..· Argentina’s August base oils supply falls to seventeen-month low on lower domestic output and imports..· Drop in output and imports gives market time to absorb surge in supplies in June and July, easing prospect of large build-up of surplus volumes.· Country likely to need to rely more on domestic production to cover Group I requirements amid dearth of arbitrage shipments compared with same time last year.· Slowing domestic lube demand boosts attraction for buyers to tap supplies from domestic sources by shortening time between procurement and delivery of supplies.· Less feasible arbitrage leaves Argentina more reliant on US to cover requirements from overseas suppliers..· Surplus Group I base oils supply around Europe shows signs of improving amid pick-up in flows from Italy, Turkey and Algeria.· Flow of Group II supplies from US to Europe shows signs of slowing in recent weeks after surge in shipments in early Sep 2023.· Flow of Group III supplies from Mideast Gulf reaching Europe shows signs of rising strongly in Oct 2023 after slowdown in Sep 2023.· Europe’s July Group I base oils supply stays lower than usual even as it recovers from June..· Tighter supply coincides with lower Group I base oils values versus diesel during Q3 2023, ICIS data shows.· Trend points to weak regional demand during that period.· Trend suggests prices would have faced even more pressure if supply had been higher.· Trend raises prospect of prices facing more pressure if supply rises and demand stays weak..· Europe’s July base oils supply from regional markets and from imports from other regions rises from June but stays lower than usual..· Total supply stays lower as slide in imports counters pick-up in regional supply.· Lower supply cushions impact of seasonal slowdown in regional demand.· Trend would need to continue to sustain supply-demand balance..· Netherlands’ July base oils supply rises to three-month high on higher domestic output..· Supply falls from year-earlier levels as slump in imports outweighs higher domestic output.· Drop in imports puts pressure on overseas suppliers to redirect shipments to other markets.· Trend likely to continue while Netherlands’ domestic output stays high..· Netherlands’ July supply exceeds demand for first time in three months, triggering rise in stocks to three-year high..· Rising supply adds to signs of recovery in Europe’s base oils supply in Q3 2023 following slump in output at end-Q2 2023..· Europe’s Group II base oils account for largest share of region’s base oils supply in July for first time..· Trend likely to continue as Group I market share shrinks..Global base oils - week of Oct 9: Price outlook - arbitrage