The U.S. base oil market experienced a steady week of activity amid a fairly quiet backdrop, thanks largely to a heavy week of vacationing for many in the industry. Posted prices survived a week of no changes, while upstream developments are in a state of flux.
Supply/demand fundamentals continue to be identified as healthy although somewhat strained in some cases. In terms of availability and depending on grade, many buyers report they cannot find sufficient volumes to satisfy their needs. Other more readily available base stocks are not necessarily abundant, suppliers emphasize, but rather balanced equal to demand. This is a situation that has improved over only the past month or so as most production sites are now being run to scheme.
There are a few exceptions where producers are still having some operating issues, but these problems are not nearly as severe as the market experienced earlier in the year.
The tight supply scenario does leave a number of customers to worry about having all their requirements filled for the upcoming fall season.
API Group III demand is ferocious and suppliers, struggling to satisfy pre-scheduled orders, are not in positions to even address buyers cries for additional volume.
The same holds true for much of the naphthenic arena, where consumers needs are exceeding supply availability for many various pale oils, due to a significant uptick in several end-use segments over the past few months, sellers and buyers say.
Group I and II suppliers agree that demand is strong for most grades, and especially the heavy-vis cuts and bright stock. They add that there has recently been a huge improvement in meeting customer requirements for light and mid-vis grades. This is mainly attributed to Motiva coming back on stream, following plant problems earlier in the year which led the company to enforce a sales allocation program from May to mid-July.
Meanwhile, looking upstream, the crude oil futures market is showing its fickle side once again. After topping the $82 per barrel mark in early-August, prices began to tumble back to the $75/bbl level late last week, only to show some recovery on Tuesday. Many analysts are still leaning toward crude price being sustained at around the $80/bbl range for the remainder of the year, although this remains to be seen.
At the close of the Tuesday, Aug. 17, NYMEX session, front-month light sweet crude futures ended the day at $75.77 per barrel, a drop of $4.48 compared to the Aug. 10 close at $80.25.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.