U.S. base oils completed another week under fairly quiet conditions, with demand described as steady and supply deemed more than adequate to cover customers requirements.
Prices are not expected to show much fluctuation over the next few weeks, given that the market appears to be generally balanced and crude oil and feedstock prices have come down from their recent highs.
September orders have been satisfactory for most suppliers, but many worried that activity would start to slide, as October typically marks the beginning of the decline leading to the year-end holidays.
According to sellers, buying interest for spot cargoes is not very strong, because most contract customers are in possession of enough inventories to cover current product needs. The API Group I and II segments appear well supplied and there is some competitive pricing activity going on, sources noted.
Some spot appetite for Group I heavy-vis cuts has emerged from Mexico, but buyers seem to be looking for bargains and are resisting the current prices for U.S. product, sources said.
In the Group III sector, orders have been coming in at a continuous pace, according to sellers.A supplier attributed the seasonal activity to OEMs currently bidding finished fluid business out to lubricant manufacturers.
Market jitters over additional Group II volumes from the new Chevron plant in Pascagoula appear to have been put momentarily on ice, as it looks like the product will not be available in the fourth quarter as originally expected. Despite the fact that the company plans mechanical completion of the facility by the end of the year, sources said that base stock from the plant was not likely to reach customers until Q1 2014.
Calumet is preparing for a turnaround on the catalytic dewaxing unit at its 7,000 b/d Shreveport, La., Group II plant. The unit is expected to be taken off-line in the next few days, and will remain down until mid-October. The turnaround will mainly affect production of the companys 80, 100, and 150 cuts, but deliveries are anticipated to be completed as scheduled.
On the naphthenic front, demand for transformer oil and pale 2000 remains strong and is expected to hold in the next few weeks.
Upstream, WTI (West Texas Intermediate) crude futures traded near the lowest level in six weeks given reduced concerns over oil supply as the United Nations Security Council is in the process of drafting a plan to dispose of Syrias chemical weapons.
WTI settled on the CME/Nymex at $103.13 per barrel on Tuesday, Sept. 24, down $2.29 from last Tuesdays settlement at $105.42/bbl.
Brent crude was trading at around $108.64 per barrel late yesterday on the CME, up $0.45 from $108.19 a week ago.
LLS (Light Louisiana Sweet) was trading at a premium to WTI of $1.20/bbl on Sept. 20, showing little change from the previous week.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.