U.S. Base Oil Price Report


Base oil producers watched the fall of crude oil prices with a certain degree of relief as margins had been squeezed by lofty values in previous weeks, and an attempt to adjust base stock prices had seemed a futile exercise due to soft demand fundamentals.

Crude oil futures plummeted after United States president Donald Trumps controversial meeting with Russian president Vladimir Putin in Helsinki. Some traders feared that Russia would increase production beyond its latest agreement with the Organization of Petroleum Exporting Countries, while Saudi Arabia also seemed ready to raise output levels.

Media reports that the U.S. was looking at the release of several million barrels of crude from the Strategic Petroleum Reserve to decrease domestic gasoline prices, and crude supply being restored in Libya and Nigeria contributed to the sharp drop.

Prices also came under pressure on Tuesday as the American Petroleum Institute reported a surprise U.S. crude oil build of 629,000 barrels for the week ending July 14, compared to analyst expectations that inventories would decline.

West Texas Intermediate futures fell below the $70 per barrel mark and settled at $68.08 per barrel on the CME/Nymex on Tuesday, July 17, down a hefty $6.03/bbl from $74.11/bbl on July 10.

Light Louisiana Sweet crude wholesale spot prices settled at $69.97 per barrel on July 16, compared to $75.68/bbl on July 9, according to the U.S. Energy Information Administration.

Brent was trading at a sharp drop from last weeks prices, settling at $72.16/bbl on the CME on July 17, down $6.70/bbl from $78.86/bbl on July 10.

Low sulfur vacuum gas oil was trading at Aug WTI crude plus $10/bbl ($78.06/bbl) and high sulfur at crude plus $9/bbl ($77.06/bbl) on July 16. By comparison, low sulfur VGO was hovering at $84.10/bbl and high sulfur VGO at $82.85/bbl on July 9, according to data published by PetroChemWire.

Base oil market activity has taken up a more sedate summer tempo, with orders proceeding as expected during this time of the year, and suppliers inventories growing slightly long as demand has weakened.

As a result, some spot numbers have also declined, with sellers offering discount incentives to promote sales. The heavy-viscosity base oils were heard to be plentiful and consequently, values were said to be more exposed to downward pressure.

Export movements into Mexico, Brazil, Colombia, and India continued to be detected, but buying appetite has also weakened somewhat as there has been a steady flow of product in recent weeks, enabling consumers to meet short-term requirements.

Generally healthy conditions were reported on the naphthenics front, with rumblings heard about possible price adjustments on the heels of the recent jumps in feedstock costs and a balanced supply/demand scenario. However, given the sudden drop in oil values, suppliers seem to have delayed any decisions regarding potential price revisions until the situation stabilizes.

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

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