Prices for both paraffinic and naphthenic base oils were stable, supported by a balanced-to-tight supply and demand ratio, together with firm feedstock costs.
Market participants reiterated that some segments of the market revealed more strained conditions than others, with the API Group I tier in particular showing signs of limited spot supply.
One producer was heard to shipping Group I base oils to Nigeria fairly regularly, but there continued to be product inquiries from Mexico and South America that went unfulfilled on account of the current market tightness. The snug conditions have also led to higher spot pricing.
Transportation on the Houston Ship Channel was heard to be returning to normal. Sources said that there had been a backlog of vessels due to a closure caused by heavy fog in late February, and some of the ships that had been scheduled to lift product that month had only been able to load last week.
Downstream, lubricant manufacturers continue to issue price increases due to climbing raw material costs, with implementation dates peppered throughout March and April. For details see U.S. Finished Lube Prices Rising Again article in this issue. This is the second round of hikes, following similar movements in February and early March.
Looking at upstream conditions, crude oil prices posted gains after the American Petroleum Institute (API) reported a surprise draw in U.S. crude oil inventories for the week ending March 16. Venezuelas falling oil production and tensions in the Middle East also helped buoy prices.
On Tuesday, March 20, West Texas Intermediate futures settled at $63.40 per barrel on the CME/Nymex, up $2.69/bbl from $60.71/bbl on March 13.
Light Louisiana Sweet crude wholesale spot prices settled at $64.59 per barrel on March 19, compared to $63.50/bbl on March 12, according to the U.S. Energy Information Administration.
Brent was trading at $67.42/bbl on the CME on March 20, up $2.78/bbl from $64.64/bbl on March 13.
Low sulfur vacuum gas oil was at April WTI plus $10/bbl ($72.06/bbl) and high sulfur VGO was at crude plus $7.50/bbl ($69.56/bbl) on March 19. By comparison, low sulfur VGO was hovering at $73.36/bbl and high sulfur VGO at $72.11/bbl on March 12, according to data published by PetroChemWire.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.