In most situations, producers say their inventories of paraffinic base oils remain tight and they are operating on a hand-to-mouth basis. There are force majeure and strict sales allocation plans in place, while some customers are also experiencing delayed shipments.

Also, there are a number of planned downtimes that will keep paraffinic inventories at low levels. These shutdowns include Petro-Canadas 30-day turnaround in Mississauga, Ontario, starting later this month. Calumet plans to take its Shreveport, La., facility offline for a scheduled three-week maintenance program on Nov 1. And in Port Arthur, Texas, Motiva will begin its recently postponed 45-day shutdown in January.

According to an update issued Monday by the U.S. Department of Energy, the ExxonMobil refinery in Beaumont, Texas, remains shut down. Motivas site is running at reduced rates, while a few units are in start-up mode.

Ergon, which makes pale oils in Vicksburg, Miss., said it plans to reduce naphthenic prices by 20 cents per gallon across the board today, Oct. 8. Calumet will lower its line-up of naphthenics by 20 cents/gal on Oct. 11.

These downward adjustments came on the heels of a San Joaquin Refining price decrease in the same amount, reported a few weeks ago by the Bakersfield, Calif., company.

Ergon attributed the drop in price to weaker raw material costs. Calumet, with its large naphthenics plant in Princeton, La., pointed out that in addition to softer crude values, a slowdown in the downstream sectors along with uninterrupted production at most naphthenic plants (the exception being the Lyondell Houston Refining Co. site) have fostered downward pressure on pale oil prices.

Smackover, Ark.-based Cross Oil plans to price base oils at a competitive level and evaluate markets going forward, according to a company spokesman.

Nynas remains neutral, an official at the company said, and will likely not follow other producers price reductions given the 100 percent sales allocation program it has in place until the middle of the month.

An increasingly wan economy and a stalled automotive industry have had their impact on the naphthenic sector in general. But producers contend that overall demand remains fairly healthy, although customer requirements are not at the robust levels reported earlier this year.

In addition to several refineries, a number of chemical and tire plants located in the Houston area have struggled with the destruction left by Hurricane Ike. Until these facilities resume normal operations, requirements for a plethora of naphthenic base stocks have been temporarily reduced.

In terms of naphthenic pricing, sources contend that pale oil values are still fairly firm, even after taking into consideration this latest round of price cuts. In many cases, prices slid by only the announced 20 cents per gallon decrease. But there have been a few cases where the reductions are more along the lines of 30 cents/gal, consumers suggested.

Pale oil 100 vis grade has been assessed in a fairly broad range, but the average price point is pegged at around $4.20 to $4.45/gallon on an FOB basis. Pale oil 500 vis is valued in a much wider band, of $4.10 to $4.80/gal, due to the various applications requiring this grade. This includes segments involving base oils, process oils and industrial uses.

At the close of the Tuesday, Oct. 7, NYMEX session, light sweet crude futures settled at $90.06 per barrel, down $10.58 from the week-earlier settlement at $100.64.

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.