However, suppliers conceded that the summer had brought some length in supplies within a few segments of the market, and that this had led to a slight softening of spot numbers, but for the most part, prices remained unchanged from the previous week. Availability of the lighter cuts within the API Group II category was said to be more evident than for other grades, with the Group I heavy grades deemed tighter as demand has been holding up, according to sources. While there has been a small downward adjustment of spot prices for the lighter grades within the Group I, suppliers said that prices had already gone down so far that they cannot go down any further, particularly in view of increasing feedstock costs.

Producers acknowledged that they were monitoring developments in the crude oil and vacuum gasoil markets very closely, as prices have been on an upward trek, but some players expected the trend to be short-lived, and preferred to maintain a wait-and-see attitude, rather than step out with base oils price adjustments. Sources said that suppliers could not risk losing market share as availability is plentiful, but at the same time, they admitted that margins have been squeezed since late last year.

A couple of sellers mentioned having received inquiries for spot cargoes from Asian and Indian importers, particularly for bright stock, but low buying ideas had hampered the conclusion of business. U.S. suppliers were also aware of upcoming plant expansions in Asia and were keeping a close watch to see whether any cargoes are expected to be shipped to the Americas. Suppliers in Asia said that supplies within the domestic U.S. market were considered sufficient to meet demand and prices were not workable for spot export transactions at this time.

In terms of current prices within the U.S. market, paraffinic price ideas (incorporating both spot offers and contract prices) are generally discussed in a range of $3.18/gal to $3.32/gal FOB for API Group I light vis cuts, although participants said that sporadic numbers near $3.09/gal for SN100 were also heard. Mid vis base oils are heard at around $3.37/gal to $3.49/gal FOB, with some lower numbers also circulating. Price indications for heavy vis cuts are pegged at around $3.90/gal to $4/gal FOB. Bright stock prices are discussed at $4.05-$4.22/gal, with the low end having moved up slightly in recent weeks given healthy demand.

Regarding Group II, prices have softened, with light vis cuts quoted at around $3.15-$3.30/gal FOB, mid vis cuts at $3.38-$3.58/gal FOB and heavy vis grades at $4-$4.20/gal FOB. Sources said that lower prices near $3.10/gal FOB were possible for the light grades, but this could not be confirmed. Price ideas may vary depending on the supplier, product and quantities.

Pale oil values are heard at $3.52-$3.69/gal FOB for 100 to 750 vis cuts and for general purpose applications. The 60 vis cut, used mostly in the manufacture of transformer oil, is heard at around $3.90-$4/gal FOB, supported by healthy demand. Heavy pale oil prices were hovering at similar levels as the transformer oil grade in the high $3s/gal. Specialty pale oils and other niche applications continue to draw premiums from 50 cents/gal to $1/gal over mainstream applications.

Upstream, WTI (West Texas Intermediate) crude traded near a three-day high on expectations that U.S. crude inventories would show a drawdown for the third week in a row, but declined during the trading session to settle on the CME/Nymex at $106 per barrel on Tuesday, July 16, up $2.47/bbl from last weeks settlement at $103.53/bbl.

Brent for August delivery settled at $109.46/bbl on the London-based ICE Futures Europe exchange, up $1.86/bbl from $107.60/bbl a week ago.

LLS (Light Louisiana Sweet) crude was trading at a premium to WTI of $4.95/bbl on July 12, compared with $5.85/bbl on July 8.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.