A seasonal slowdown in demand, the release of hurricane-related product provisions, and the return to production of a number of plants following output disruptions had all conspired to place downward pressure on base oil pricing in recent weeks. While posted prices remained unchanged, spot prices had been more exposed to downward adjustments as sellers sought to dispose of barrels ahead of Dec. 31. However, this week, participants reported a more balanced market and stable pricing, with climbing crude oil values providing additional support.
A reduction of surplus volumes was partly attributable to suppliers having made concerted efforts to attract buyers – both at home and on the export front – by offering competitive prices. This strategy seemed to have partially worked as the extra supplies have dwindled and spot values have stabilized. Some refiners had also resorted to lowering base oil production rates and streaming more feedstocks into fuel output. Margins for diesel had been more attractive and this had offered more incentive for refiners to favor distillates output, but diesel prices have softened.
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