Supply-demand balances in the U.S. base oil market continue to ease, heading into what is traditionally the slowest buying period of the year. Sources described the market as being in relatively good shape, with at least several weeks to prepare for two significant Group II maintenance shutdowns scheduled for the first quarter of 2007.
Sources said availability continues to recover from an unprecedented series of supply disruptions last year and in early 2006. Buyers said supply of light neutrals is generally balanced to long, while heavier grades are balanced at best.
Maintenance turnarounds are scheduled early next year at Chevrons plant in Richmond, Calif., and for one of three production trains at Motivas Port Arthur, Texas, facility. According to sources, Chevron had scheduled its event to begin in January, but has recently suggested it may nottackle the work until February. Motivas is scheduled for first quarter 2007.
The Richmond plant has capacity to make 15,000 barrels per day, and the Motiva train is also sized for 15,000 b/d, so the market will lose a significant amount of output during the turnarounds. Still, buyers said they expect the companies to build inventories ahead of the shutdowns so the events should not cause much disruption.
Posted paraffinic base oil prices are unchanged in the United Statesthis week. Crude closed at $60.09per barrelyesterday on the New York Mercantile Exchange, according to Bloomberg. Thatwas$1.67 above the price a week ago.
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