As crude oil values pursued their ascent – busting through the $87 per barrel mark earlier this week – it was not a shock when U.S. naphthenic producers stepped out with price increase announcements. The paraffinic side, however, remained quiet on the subject. Market activity was fairly lively overall as buyers prepared to beef up orders in advance of steeper prices, suppliers said.
San Joaquin Refining plans to raise its pale oil prices by 20 cents per gallon across the board on Friday, Nov. 12. A hefty portion of SJR business is linked to the cost of crude.
This is not a rare practice among naphthenic producers, sources added, although how much influence the fluctuation of crude values may have on monthly contracts depends on producer, grade, account and end use.
On Nov. 17, Ergon will up its transformer oil and 60 pale oil prices by 25 cents/gal, while adding 20 cents/gal to all other naphthenic grades.
Calumet said it will hoist all its naphthenic pale oils by 20 cents on Nov. 19.
On Nov. 20, Nynas plans to push up its 60 pale oil and transformer oil by 25 cents/gal, while hiking all other naphthenic grades by 20 cents.
Cross will hike its pale oil line-up by 20 cents/gal on Nov. 22, a company official advised.
In most cases, naphthenic producers provide their customers with up to two weeks advance notice of price adjustments.
Several suppliers acknowledged that their customers were scurrying to take on some extra volumes in efforts to beat the price moves. This pattern was said to be taking place in both the naphthenic and paraffinic sectors.
In a follow-up to bright stock pricing actions reported in the Nov. 3 issue, a Calumet spokesman clarified that although the company did not increase its posted price on bright stock last week, customers below posted prices received increases up to 25 cents/gallon on that product.
In upstream news, crude oil futures climbed to a two-year high this week. Many analysts are of the mind that prices will continue to climb throughout the coming years on expected demand growth for energy.
A major surge in Chinese demand, by up to 75 percent, is expected over the next 25 years, according to predictions by the International Energy Agency. And energy experts suspect that this could provoke crude oil values, likely back into the $110-plus-per-barrel range.
In its annual World Energy Outlook report, the IEA forecasts that crude oil supplies will be pushed near their peak. The Organization of Petroleum Exporting Countries will account for 50 percent of the worlds oil supply by 2035, while production from outside the group will falter, the IEA said. OPEC currently accounts for about 40 percent of global supply.
China will continue as the No. 1 energy consumer over the next quarter-century, and crude oil will remain the dominant fuel despite huge investment in alternatives, according to an IEA report released on Tuesday.
At the close of the Tuesday, Nov. 9, NYMEX session, light sweet crude futures ended the day at $86.72 per barrel, a gain of $2.82 compared to the settlement a week earlier at $83.90/bbl.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.