News of a price move within the API Group II sector seemed to awaken the U.S. base oil market from weeks of inactivity and quietness amid the holiday season. Sources said that Motiva had stepped out earlier this week to announce that the Gulf Coast producer would adjust its posted prices down between 30 cents per gallon and 38 cents/gal. Thus far this year, no other fresh price moves have emerged.
According to sources, Motiva told its customers that it had reduced its lineup of Group II base stocks. The Star 4 (110 vis) posting shed 38 cents/gal to reach a new price of $3.37/gal. Star 6 (220 vis) dropped 33 cents/gal and the new price is now $3.70/gal, while Star 12 (600 vis) was decreased 30 cents/gal to $4.45/gal. These fresh posted prices were effective Tuesday, Jan. 8.
Base oil consumers suspect that the Motiva move will open the door for the remaining Group II producers to lower postings. They also suspect that the market could see some price adjustments to the downside in the Group II+ and III sectors in the coming week.
This suspicion is based on the fact that global base oil pricing have spiraled downward in recent months (mainly in Europe and Asia) as demand has waned. Traders and suppliers in the regions have tried to lure buyers with lower prices, but to limited success, according to sources.
Meanwhile, U.S. prices have also come down, but apparently Asian and European prices are still much more competitive. Therefore, there are some opportunities for imported material to arb into the domestic arena at attractive numbers. In fact, it is understood that several cargoes are headed to the United States.
Sources contend that U.S. producers are being forced to drop domestic prices in an effort to compete with the cheaper foreign-based material apparently finding its way into the United States.
Overall, suppliers have indicated that buying interest has picked up since the holiday doldrums. Sellers have seen an uptick for an array of paraffinic and naphthenic grades.
At the close of the Tuesday, Jan. 8, CME/Nymex session, front month light sweet crude oil futures ended the day at $93.15 per barrel, climbing marginally by 3 cents/bbl from last weeks settlement at $93.12. Brent Crude was trading at $112.08/bbl at the end of the day yesterday, dropping 20 cents from its week-ago level of $112.28. LLS (Light Louisiana Sweet) crude was trading at a premium of $17.85/bbl to WTI on Tuesday.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.