Although still somewhat quiet, there are welcome signs that activity is resuming to a more normal pace in the U.S. base oil market. Suppliers said that projected sales for September-October are more substantial than compared to August volumes, a month that was very slow, they pointed out.
Even though activity had been viewed as somewhat low-key since late July to the present, demand was still deemed fairly healthy. Overall base oil availability for much of the spring and summer was said to be very snug.
With most base oil facilities running at expected rates, that opened the door for inventories to improve last month – particularly in the API Group I arena, players report. This allowed certain grades to become less tight compared to the May-June stock positions.
The Group II and III sectors continue to cope with extremely tight supply conditions amid robust demand and prevailing sales allocations, sources say.
In the past several weeks, many paraffinic and naphthenic suppliers have expressed a greater sense of relief as they have caught up with customer back-orders, which are now being filled in a timelier manner.
In recent weeks rumblings have surfaced suggesting European and Asian price ideas may have toppled from their earlier summertime highs, but this has not influenced domestic U.S. values as of this week, according to a number of sources.
Despite some disgruntled buyers moans, posted prices remain firm in the United States. Customers point out that crude oil values have slipped from the mid-to-high $90s per barrel seen in July down to the mid-to-high $80s/bbl throughout most of August and into September.
Producers still contend that operating costs remain high in spite of benchmark WTI prices having slipped below the $90/bbl mark. They point out that vacuum gas oil values have for some time been running at a significant premium to WTI, at circa $30+/bbl. Moreover, as of late last week, low-sulfur VGO values spiked as high as $40/bbl over WTI. Some producers also reiterated that a number of domestic crude types, such as Light Louisiana Sweet, are running at a big premium to WTI at around $28-29/bbl, and foreign oils are also substantially higher than WTI at plus $29-$34/bbl.
At the close of the Tuesday, Sept. 6, NYMEX session, front month light sweet crude oil (WTI) futures ended the day at $86.02 per barrel, a loss of $2.88/bbl from the week earlier settlement at $88.90/bbl. Meanwhile, in late-day trading Brent crude was posted at around $114/bbl.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.