No way, the producers counter. Group I producers are standing firm on current price levels, and they do not plan to push down postings, several sources said. They explained that margins are being squeezed as operating costs have escalated substantially the past month. One supplier pointed out that in some cases it is cheaper for a refiner to produce more refined products than use the feed for the production of base oils.

Several sources noted that current Group I and Group II posted prices are very close, and the usual differential for Group II base oils has vanished. This is the case, at least for the time being, sources added.

There was also some discussion among market watchers about certain rerefined base oils competing strongly with virgin Group II grades. This competition may be causing the usually firmer Group II prices to tumble.

Not all participants agree with the rerefined theory. Others attribute todays pricing to the drop-off of export activity to Europe and Asia the past four to six months. Without those shipments leaving the U.S., the domestic market has seen a build up and subsequent over supply situation for Group II product. If exports were at normal levels, Europe and Asia would be soaking up much of the North American produced base oils, but the economic downturn in these regions has halted a considerable amount of business for U.S. suppliers.

Meanwhile, the Ergon, Vicksburg, Miss., refinery entered a planned 29-day maintenance turnaround earlier this month. The facility has 22,000 barrels per day capacity for naphthenic base stocks. The company said that it did not expect any delays in customer shipments during the scheduled downtime, and that all orders should be filled.

Calumet Specialty Products said it would take its Shreveport, La., facility off line mid-February for a scheduled two-week routine maintenance turnaround. The Shreveport plant can produce a total of almost 12,000 b/d day of Group I and II paraffinic base oils. The company does not anticipate any delays in customer shipments during the downtime.

See the full story in this week’s Lube Report regarding a recently announced expansion at the ExxonMobil Baytown, Texas, refinery that is expected to commence later this year and be completed in early 2015.

At the close of the Tuesday, Feb. 5, CME/Nymex session, front month light sweet crude oil futures ended the day at $96.64 per barrel, down 93 cents/bbl from last weeks settlement at $97.57. Brent Crude was trading at $116.58/bbl at the end of the day yesterday, up $2.42 /bbl from its week-ago level of $114.16. LLS (Light Louisiana Sweet) crude was trading at a premium of $20.25/bbl to WTI on Tuesday.