Lower spot prices and temporary voluntary allowances (TVAs) had been granted as a means to promote sales, but these have been largely removed and no further price reductions have been reported for the time being.

Attractive prices also led to large quantities of U.S. product being exported to India and Mexico in the last quarter of the year. Demand from Mexico is expected to remain strong as the inventories of local producer Petroleos Mexicanos (Pemex) are very low, sources explained.

U.S. market participants believed that base oil prices would remain fairly stable, despite squeezed margins and continued pressure from volatile crude oil and feedstock vacuum gas oil prices.

However, sources also pointed out that West Texas Intermediate (WTI) values slipped from highs around $110 per barrel in mid-2013, and that January was not the best time to introduce price changes, as requirements are still fairly slow.

Market conditions were expected to show more strength in late February, but the introduction of added capacity into the U.S. supply network will weigh heavily on suppliers minds at that juncture.

Understandably, a lot of attention will focus on the impending start-up of the new Chevron base oil plant in Pascagoula. The 25,000 barrels per day API Group II unit was scheduled to achieve mechanical completion by the end of 2013, and commercial product was expected to be available in late Q1 2014. Despite recent reports that the start-up had been delayed, market sources familiar with Chevrons operations said that the process to bring the plant on line was on schedule.

In other production news, it was heard that one of Motivas base oil units is currently undergoing a turnaround. The turnaround at the smallest of the three units at Port Arthur, Texas, will only affect production of light viscosity grades and will be completed in less than twenty days, according to industry sources. The shutdown is not expected to have a significant impact on availability as the producer has built inventories to cover for the shortfall. Motiva has postponed a turnaround scheduled at a larger unit from the first quarter to the third quarter of 2014. Motiva has a total base oil capacity of 40,300 b/d at the Port Arthur refinery.

Upstream, WTI crude futures rebounded after a five-day downward trek during which prices dropped by almost $7 per barrel. The rise came on the back of forecasts that U.S. stockpiles had dipped ahead of a weekly report from the Energy Information Administration (EIA).

WTI settled on the CME/Nymex at $93.67 per barrel on Tuesday, Jan. 7, down $5.62 from a settlement at $99.29/bbl on Dec. 30.

Brent crude was trading around $107.35 per barrel on the CME, down $3.86 from $111.21/bbl a week ago.

LLS (Light Louisiana Sweet) was trading at a premium to WTI of around $6/bbl on Jan. 4, compared with $4.50/bbl on Dec. 28.

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