U.S. base oil supply/demand conditions remain sluggish, with most paraffinic participants identifying stocks as readily available amid fairly flat to steady buying interest. The naphthenic sector maintains a better balanced stance than the paraffinic side, with demand for pale oils stable at best – losing some of the vigor seen earlier in the year.
Meanwhile, Ergon confirmed that it will raise the price of all its naphthenic grades 15 cents per gallon, effective Monday, Oct. 29. Higher prices are necessary to remain competitive, as all other naphthenic producers increased prices earlier this month, the company indicated. Rising operating costs also played a role in price hikes for these producers, as naphthenic pricing is closely linked to crude oil prices, said sources.
Motiva continues to cope with some lingering transportation delays for base oils, following operational issues encountered at the Port Arthur, Texas, refinery complex on Sept. 13. Hurricane Humberto slammed into the region that day, causing at least three U.S. Gulf Coast refineries to shut down due to power failures. All refiners resumed normal operations shortly following the storm, but scheduled shipments have fallen behind.
Given the rather mundane state of the U.S. base oils market, most players suspect that the year will end quietly. This is in spite of several planned outages taking place during the late September to early November time frame, sources pointed out.
In Brazil, domestic consumption is described as very healthy. But due to a scheduled outage currently underway at the Petrobras Duque de Caxias 12,000 barrel per day API Group I refinery near Rio de Janeiro, the company is seeking spot volumes to help bridge shortfall of product.
The erratic behavior of crude oil values continues to captivate market players attention. During the past week, futures trade reached $90.07 per barrel, the highest price since the contract was introduced in 1983. Since Friday, crude values have shed almost $5/bbl from that peak. Nevertheless, oil prices are up approximately 46 percent from a year ago.
Energy analysts said that it is unclear whether the crude price decline the last several days could be the start of a bearish market or a bit of consolidation before another push toward $90 per barrel.
At the close of yesterdays NYMEX, light sweet crude ended the session at $85.27 per barrel, shedding $2.34 from the $87.61/bbl October 16 close.
Carolyn L. Green, based in Houston, can be reached directly at carolynlgreen@gmail.com.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.