Additionally, refineries were expected to start their spring maintenance period, resulting in reduced crude demand, while Russian government data showed that Russias oil production dropped in April from March, but was still higher than Russias target under the OPEC+ production cut deal.

On Thursday, May 2, Brent July futures were trading at $70.08 per barrel on the London-based ICE Futures Europe exchange, down from $74.91/bbl for June futures on April 25.

Crude oil prices had been hovering at record highs, placing pressure on base oil producers as margins have narrowed considerably. A number of suppliers had been able to lift offers during the previous two weeks, but it was difficult to push the higher numbers through because of adequate availability of product.

In fact, a number of base oil cuts have undergone downward adjustments over the last couple of weeks due to ample supply, with the low-viscosity grades in the API Group I and II categories experiencing decreases in origins such as Singapore and India.

Sources also mentioned that the Group III segment was oversupplied and prices were therefore in a precarious position, particularly as suppliers were trying to protect their market share.

There were also discussions about the possibility that some producers would start to reduce base stock run rates at refineries in order to help the market achieve a more balanced supply/demand situation, but no specific plants were mentioned in connection with this strategy.

Other suppliers were exploring ways to stimulate sales, with Taiwanese producer Formosa Petrochemical heard to have awarded a sales tender for about 3,000 metric tons of light-viscosity Group II base oils for May shipment.

Some participants expressed concern at the fact that additional product may be introduced into the market in June as ExxonMobil was heard to be poised to complete a Group II expansion at its Singapore refinery. The project began in 2017, and is the first of two planned expansions as the site.

At the same time, there were reports that ExxonMobil would be taking its Pulau Ayer Chawan Group I plant off-line for a routine turnaround in June, although this could not be confirmed with the producer directly. The plant can produce 678,000 t/y of Group I base oils, according to LubesnGreases Guide to Global Base Oil Refining.

Spot prices in Asia were largely unchanged this week as business was subdued. Prices had moved up over the two previous weeks on the back of the relentless climb in crude oil, feedstock and transportation costs.

Ex-tank Singapore Group I prices for the solvent neutral 150 grade were unchanged at $740-$760/t per metric ton on a major refiners price adjustments, while the SN500 was assessed at $790/t-$810/t. Bright stock was hovering at $900/t-$920/t, all ex-tank Singapore.

Group II 150 neutral was mentioned at $780/t-$800/t, while the 500N was heard at $790/t-$820/t, ex-tank Singapore.

On an FOB Asia basis, Group I SN150 was steady at $650/t-$680/t, and the SN500 grade was at $640/t-$660/t. Bright stock was heard at $790/t-$810/t, FOB Asia.

Group II 150N was hovering at $630/t-$650/t FOB Asia, while the 500N and 600N cuts were near $640/t-$660/t, FOB Asia.

In the Group III segment, the 4 centiStoke grade was heard at $830-$870/t and the 6 cSt was stable at $840/t-$885/t. The 8 cSt grade was steady at $730/t-$760/t, FOB Asia for fully-approved product.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.

LubesnGreasesshall not be liable for commercial decisions based on the contents of this report.