Asian base oil prices continued to be exposed to downward pressure, and volatile crude oil and feedstock values did nothing but incense expectations that the market would continue to be plagued by uncertainties. While most of the base oil price pressure came from a supply and demand imbalance – which is not completely atypical in the last quarter of the year – the volatility observed in feedstock pricing only exacerbated participants’ concerns about price instability.
Crude oil prices jumped during the first week of October as OPEC+ members agreed to a production cut of 2 million barrels per day – the largest cut since the height of the pandemic in 2020 – to boost oil prices. However, oil futures fell earlier this week when both the World Bank and the International Monetary Fund voiced worries about a potential global recession, eclipsing the OPEC+’s decision. China’s ongoing zero-COVID policy and related lockdowns, which might soon include densely populated cities like Shanghai and limit oil consumption in coming weeks also weighed on pricing. Ongoing sociopolitical tensions in the Middle East and the war in Ukraine were also expected to continue having an impact on oil and natural gas prices.