U.S. Base Oil Price Report

The effects of the summer doldrums seemed to be lingering in the market, with demand characterized as steady, but not stellar, and supplies adequate to cover requirements.

Participants hoped that activity would pick up as the summer holiday season came to an end.

Most participants concurred that buying interest had lost some of its luster over the last month as many players had been away from the market, but "there has been enough refinery downtime to keep inventories under control," a source commented.

Prices were surprisingly holding steady for a majority of grades, with a participant noting that it had been a quiet August, but there had not been as much price pressure as expected. Values for the API Group III cuts were still influenced by competitively-priced Middle East product, according to sources.

With the return to business and preparations for the last few months of the year underway, sellers expected to see a slight uptick in demand in the coming weeks.

The mood was likely to remain fairly cautious, however, as there continued to be economic and political uncertainties that were dampening the business atmosphere.

Export opportunities have declined slightly, with demand for U.S. base stocks from Mexico -

which had been fairly steadfast over the last few months - said to have softened, and movements to South America also heard to have slowed down, although a couple of suppliers said that they had not seen major fluctuations in order levels. A parcel or light viscosity grade was heard to have been shipped to Mexico from the Baltic, but further details were unavailable.

The continuing trade conflict between the United States and China was again on the forefront this week, with crude oil prices quickly reacting to the changing positions of both governments.

Oil prices tumbled last Friday as China threatened to impose new tariffs on $75 billion worth of U.S. goods, with the first round of tariffs expected to start on Sept. 1, and the second taking effect on Dec. 15. Some products would see a 5 percent tariff and others 10 percent, with the list of affected products including many chemicals, plastics and crude oil. China would be imposing the tariffs in retaliation to the U.S. slapping a 10 percent tariff on $300 billion worth of Chinese imports.

On Monday, oil prices moved higher as China and the U.S. both appeared to be willing to resume negotiations, but fell as the day ended because of traders' concerns about lower global oil demand.

Then, on Tuesday, oil prices climbed again after U.S. President Donald Trump talked about a possible trade deal with China following positive comments by Beijing, and reports of a huge draw in U.S. crude inventories. Futures were trading higher despite talk that Washington could be softening its position on the Iranian nuclear deal and its sanctions on Iranian oil exports.

On Tuesday, August 27, West Texas Intermediate September futures settled at $54.93 per barrel on the CME/Nymex and had closed at $56.34/bbl on Aug. 20.

Brent futures for October delivery settled at $59.51/bbl on the CME on Aug. 27, and had closed at $60.03/bbl on Aug. 20.

Light Louisiana Sweet crude wholesale spot prices settled at $56.69/bbl on Aug. 26, according to the Energy Information Administration.

Low sulfur vacuum gas oil was trading at Oct. WTI plus $15.10/bbl ($68.74/bbl); high sulfur VGO at crude plus $15.35/bbl ($68.99/bbl) on Aug. 26. By comparison, low sulfur VGO was hovering at $71.21/bbl and high sulfur VGO at $71.46/bbl on Aug. 19, according to data published by OPIS PetroChemWire.

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