The U.S. base oil market was inundated with more price increase notices over the past week. Apart from late March announcements by San Joaquin Refining and Cross Oil alerting their customers of certain price hikes, two other major naphthenic producers stepped out with fresh initiatives to bolster pale oil prices between 12 and 15 cents per gallon.
Ergon told customers that it would push up all grades between 60 vis and 300 vis by 12 cents/gal, while pulling up 500 pale and heavier grades by 15 cents. The new prices will become effective Monday, April 12.
Cross Oil, which had already pushed up heavy vis pale oils (1200 vis plus) by 15 cents/gal on March 22, now plans to lift 60 pale through 750 vis by 15 cents/gal on April 12.
Calumet said that it would raise all pale oil grades lighter than 500 by 12 cents/gal, while hiking 500 vis and heavier by 15 cents/gal, effective April 15.
These naphthenic price moves follow a round of price increases issued by all paraffinic producers commencing in early/mid March. All upward price adjustments were driven by rising crude and feedstock costs as well as enhanced customer orders, producers said.
As previously mentioned, demand has shown marked improvement during the past few months, especially when compared to one year ago. But suppliers reiterate that overall year-to-date sales still lag those reported in 2002 to 2006.
Conversely, demand during 2007 and much of 2008 was exceptionally strong. Many sellers do not anticipate that level of intense activity to be repeated anytime soon, however, barring any unforeseen extreme base oil plant outages or permanent closures.
The heavier-end cuts remain the more sought-after grades, sellers say. Whether it is paraffinic 500 through bright stock or naphthenic pale oils 1200 through 2000 plus, many suppliers say they are running low and are not seeking out additional spot business opportunities.
Buying interest for lighter viscosity grades has also picked up, but buyers claim that there is no shortage of availability for 100 vis through 350 vis.
Looking upstream, crude oil prices have jumped 24 percent since early February and headed toward the $87 per barrel mark on Tuesday. Crude futures had traded roughly between $69/bbl and $82/bbl for about nine months, before breaking out late last week amid investor optimism that an improving U.S. economy will eventually boost crude demand. On Monday, economic reports showed strong improvements in demand for services businesses as well as the housing market.
There are some analysts and energy experts that are concerned that too-high crude prices could hinder the global economic recovery, despite crude values moving largely in sync with stock markets.
At the close of the Tuesday, April 6, NYMEX session, front month light sweet crude oil futures ended the day at $86.84 per barrel, a sizeable gain of $4.47/bbl from the week earlier settlement at $82.37.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.