The most obvious factor was the price of crude oil, which has risen more than 33 percent since January, returning to the highest levels since September. In addition, supply continues to be disrupted by a variety of developments. Ergon recently encountered problems with its crude oil supply from Venezuela, according to several marketers, one of whom stated that the refiner has switched suppliers. Valeros refinery had more than three weeks of unplanned downtime over at least two different occasions this year.

Such incidents further cinched a market that was already tight due to the closing last year of the Oildale, Calif., refinery formerly operated by Golden Bear Oil Specialties, which went bankrupt, and the former Pennzoil-Quaker State refinery in Shreveport, La., which was purchased by Calumet Lubricants Co. Some relief is expected from last months resumption of naphthenic production at Shreveport. But one supplier said the market was further disrupted after Lyondell Lubricants landed an enormous contract to send all of its production (3,200 barrels per day, according to NPRA) to Goodyear.

Lyondell used to sell some of its supply into the Detroit area, but this contract takes them out of that market completely, the supplier said. That may not represent a change in the overall supply-demand balance, but it takes a while for other suppliers to connect with those Detroit customers that were buying from Lyondell. Itll get ironed out, but its just another disruption in the short run.

Still, sources agreed that supply – particularly for the markets workhorse, SUS 100 pale oil – is tight enough to warrant further price increases, especially if crude does not fall.

If crude stays up around $27, $28 a barrel, I imagine well see [naphthenic] prices firm up again at the end of April or the beginning of May, a marketer said.