Base oil availability is improving in the United States, but many producers are still unable to participate in the spot market given a lack of extra volumes beyond those needed to meet contractual obligations.
This was particularly the case within the API Group I segment, with suppliers reporting that they continued to be approached by buyers – both domestic and foreign – to secure spot cargoes, but there was little product to offer.
It was also heard that both Motiva and ExxonMobil had not yet lifted their allocation programs implemented post-Harvey on their base oils. Operating rates at both facilities were heard to have improved substantially since the producers were forced to shut down production, following the hurricane, and they were therefore able to start rebuilding inventories.
Given that most U.S. facilities are currently back to normal operating rates, both buyers and sellers expected the market to be better supplied this month and the next.
At the same time, demand was heard to have softened slightly compared to October and early November, but this followed seasonal patterns because requirements tend to decline ahead of the year-end holidays.
Some of the price pressure radiating from steeper crude oil and feedstock prices appeared to be subsiding as both WTI and Brent declined after hitting their highest levels since 2015 the previous week.
Crude oil prices slipped on Tuesday for the third day in a row on the back of reports of rising U.S. output and a gloomier outlook for demand growth from the International Energy Agency (IEA), Reuters reported.
The IEA on Tuesday offered a surprisingly downbeat outlook for oil demand in its monthly market report, showing an expected slowdown in consumption that seemed to counter a more bullish view from OPEC on Monday.
Nevertheless, WTI futures closed slightly higher on the CME/Nymex on Tuesday, Nov. 14, at $55.70 per barrel, compared with $57.20 per barrel on Nov. 7.
Light Louisiana Sweet wholesale spot prices settled at $62.57 per barrel on Nov. 13, down from $63.22/bbl on Nov. 6, according to data from the U.S. Energy Information Administration.
Brent was trading at $62.21/bbl on the CME on Nov. 14, down $1.48/bbl from $63.69/bbl on Nov. 7.
Low sulfur vacuum gas oil was at Dec WTI plus $12/bbl ($68.76/bbl) and high sulfur VGO was at crude plus $10/bbl ($66.76/bbl) on Nov. 13. In comparison, low sulfur VGO was hovering at $70.10/bbl and high sulfur VGO at $68.35/bbl on Nov. 6, 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.