The more interesting changes came from ExxonMobil, according to sources. The major informed its customers that, effective Tuesday, June 9, it would boost its Group I 100 solvent neutral posted price by 40 cents/gal, but would knock 10 cents/gal off its SN 275 grade. ExxonMobil lowered its bright stock posting by 30 cents/gal, a move that stunned many players throughout the market.

Valero said that it would largely mirror ExxonMobils adjustments. On June 12, Valero plans to raise its Group I SN 100 posted price by 40 cents/gal, and will drop its bright stock posting by 30 cents/gal. Valero no longer has a Group II posting.

Market players speculated that the reductions applied to a few posted prices were to bring them to a more realistic level, to better represent actual market business. They added that prior to this weeks decrease, bright stock trade had been concluded at huge discounts to the posted price, particularly during the January-to-April time frame. More recently, however, bright stock values have been firming, and the steep discounts once offered were no longer available, several sources said.

The price hikes applied to lighter vis grades made sense to most players. They understood that prior to the current round of adjustments issued by many base oils producers, the values for 100, 150 and 200 viscosities had fallen below the cost of vacuum gas oil (VGO) in recent weeks.

Although ExxonMobil did not implement a change to its SN 150 during the recent round, some sellers who opt to trade based on the ExxonMobil posting will offer no more than 15 cents/gal off, or a price of $1.97 FOB, for spot trade. This is approximately a 7 percent discount off the posting, which currently stands at $2.12/gal.

Meanwhile, most suppliers agree that overall demand for a range of base oils remains at stable levels. In a number of situations, demand continues to build week over week, and the growth is welcomed by most producers.

Although it appears that crude has steadied around the $68 to $69 per barrel mark since the start of June, it is up by an estimated $15/bbl since the same time in May. The leap in oil values as well as rising vacuum gas oil prices are wreaking havoc among base oil producers. While they will continue to monitor upstream developments, increased operating costs have already caused considerable margin deterioration, they note.

Crude oil prices have surged alongside equity markets on investor optimism that the worst of a global recession is over. Crude values have recently touched above $70/bbl, the highest level reached since October.

Conversely, crude inventories at Cushing, Okla., remain near a 19-year high while demand in the U.S., the world’s largest consumer of oil, is deemed sluggish.

Energy analysts maintain that there continues to be some economic optimism, saying that investors have brushed aside any near-term concerns about the weak crude oil market supply/demand fundamentals.

At the close of the Tuesday, June 9, NYMEX session, light sweet crude futures settled the day at $70.01 per barrel, up $1.46 from the $68.55/bbl close reported one week earlier.

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