Base oil prices around the European, Middle Eastern and African markets are muted due to a mounting oversupply situation that is growing by the day. Supplies of all groups are ample to cover immediate and forward requirements into the first quarter of next year.
Group I prices are approaching a critical point where raw material costs overtake selling prices, causing some sellers to comment that they would rather not produce base oils. Some have declared that they will stop production in December rather than dump material at a loss into a market which is saturated with availabilities. Fuels production is much more appealing, so feedstock streams may be diverted away from Group I output, which could lead to shortages of this category during 2020.