Domestic Fuels Mixed; Global Crude Lifts Sentiment

Key Highlights

• Demand Recovery: Industrial fuel and lubricant consumption rising ahead of the festive season.
• Supply Tightness Risk: CPCL’s month-long maintenance may temporarily constrain domestic availability.
• Global Base Oils: Increased U.S. and South Korean exports, plus IOC expansion, add competition.
• Crude Support: Brent and WTI gain on supply concerns, lifting market sentiment.

Domestic Oil & Fuel Price Overview

• Domestic oil product prices across India showed mixed trends. Furnace Oil (FO 180cst) was assessed at ₹47,540–48,607/MT depending on the location, while Light Diesel Oil (LDO) was reported in the range of ₹58,300–60,890/KL. 
• Mineral Turpentine Oil (MTO) hovered between ₹72,850–108,740 depending on delivery basis and refinery. LSHS prices remained steady in the band of ₹50,130–53,067/MT.
• Internationally, Brent crude November futures rose by $1 or 1.5% to $68.47/bbl, while WTI October futures gained $1.23 or 2% to $64.53/bbl, supported by supply-side concerns and expectations of inventory draws in the U.S. Fuel oil markets in Singapore saw VLSFO spot differentials rebound into premiums, while HSFO weakened amid widening cash discounts.

Post-Monsoon Demand Recovery and Supply Outlook

• Domestic demand has begun to improve after subdued monsoon months, although heavy rains continue to restrict purchases in some regions. Industrial fuel and lubricants consumption is rising, with appetite for bright stock strengthening ahead of the Diwali festival in mid-October.
• Supply levels remain balanced, but availability is anticipated to tighten due to maintenance activity at Chennai Petroleum’s plant, which began mid-September. 
• Internationally, Group I base oil availability is being supported by resumed production in the U.S., offsetting limited flows from Iran. 
• South Korean and U.S. suppliers are also exploring India as an export destination, while additional cargoes from Taiwan are expected in October.

Global & Local Market Developments

• Domestic Refinery Turnaround: CPCL’s planned one-month turnaround in Chennai is expected to constrain domestic availability of refined products.
• International Supply: U.S. plants resuming full production are adding liquidity to global base oil markets, reducing tightness concerns.
• Group III Base Oils: Downward pressure has emerged as a South Korean supplier lowered offer levels, while added Chinese volumes and IOC’s upcoming Haldia plant expansion are expected to increase domestic competition.
• Fuel Oil in Asia: VLSFO cash differentials rebounded, contrasting with HSFO’s bearish tone amid wider discounts.

Expert Opinion: Analyst Insights and Price Forecast

• In the near term, Indian demand is expected to strengthen further with seasonal industrial and festival-driven consumption, particularly for lubricants and bright stock. However, supply expansions in India and increased international availability may cap price gains for base oils. 
• Fuel oil and LDO prices may remain under pressure as availability improves, though short-term refinery maintenance could provide support. Globally, crude oil prices will continue to be influenced by geopolitical risks, including potential disruptions to Russian oil exports, and by monetary policy developments in the U.S., where rate cuts could stimulate demand.