Im surprised its only 5 cents, said one base stock buyer. We were guessing 8 to 10 cents per gallon. Id say there will be more [increases].

Another base oil supplier also expressed surprise at the modest size of the ExxonMobil move. Margins are in the low 40s, he said, and thats low historically. A couple of years ago margins were in the 30s. Exxon held its price [low] for several months, and it really hurt.

Not everyone was surprised by the size of ExxonMobils price change. Traditionally, 2 to 5 cents is a normal price move, noted another base stock buyer. Despite the high price of crude, the 5-cent increase is probably appropriate given the tightness of Group II-plus.

Attention is now focused on Group II prices. In recent months, said one lube manufacturer, Group II prices have generally followed Group I, but with a premium. My guess is we may see a smaller adjustment on Group II [than on II-plus], maybe 2 to 3 cents.

It will be very interesting to see what happens with Group II, said another blender. Who will the Group II price leader be? Will it be Shell?

Regarding Group I prices, a base stock buyer noted that two factors are at work. First is supply and demand, and there has been no recent pickup in demand, he noted. The second factor is European imports. The cost of imported base oil from Europe is keeping Group I prices down. Of course, no refiner will miss the chance to increase margins.

But crude is the critical factor, he said. The sustained level of crude pricing is the key to base oil prices. It will put pressure on Group I.

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