U.S. base oil market fundamentals continue steady, with supply largely balanced alongside still-healthy demand for many grades. Posted prices are unchanged, but buyers and sellers are keeping a very close eye on upstream developments as crude values are holding at lofty levels. And Chevron and Holly sales allocation have now been removed.
A Chevron spokesperson said that its 20,000 barrel per day Group II Richmond, Calif., plant is back up and running, and the company has eliminated its allocation program on all grades of base oil effective immediately. Chevron completed its emergency shutdown ahead of schedule and without incident. During the past week, Holly Refining and Marketing also removed its 50 percent sales control on its bright stock, a plan that had been under way for about four months.
Regarding price issues, in late-day activity on Tuesday, rumors surfaced suggesting that a major refiner had issued a 25 cents per gallon posting increase for at least bright stock. However, at the time this weeks edition closed, it could not be determined whether a price notice had been released to market buyers.
Although with some shortages at hand, consumers say that they are receiving their necessary requirements for most cuts of paraffinic and naphthenic base stocks. They admit, however, that additional volumes would be welcomed.
Unfortunately, surplus of most heavy vis neutrals in all categories are still unavailable and may remain so through the first quarter, according to suppliers. This may hold true for certain light and mid vis cuts too, they added.
The Group III segment remains exceptionally tight in supply alongside strong demand. Buyers say they are continuing to seek new avenues for supply, but are finding it difficult. A few spot imports did reach the U.S. market, but these quantities were quickly absorbed.
While there had been some moderate improvement in supply availability over the past few months in the Group II sector, this situation may have taken a turn for the worse in recent weeks. It is understood that any and all surplus volumes sprouting up were being snatched up by Chevron on the West Coast to meet internal blending commitments, but this buying frenzy could abate now that Richmond is back on line.
Meanwhile, with crude values holding up at over $80 per barrel for the month, there is talk from the buy side that upward price pressure is intensifying in the naphthenic arena and even for paraffinic cuts to some degree.
Pale oils are balanced to tight, depending on vis grade and end-use consumption needs. Pale oil prices have not moved for over a month, sources noted, and are heavily influenced by monthly average crude values.
At the close of the Tuesday, Oct. 26, NYMEX session, light sweet crude futures ended the day at $82.55 per barrel, a gain of $3.06 compared to the week earlier settlement at $79.49/bbl.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.