U.S. Base Oil Price Report


Posted U.S. base oil prices continue to hold following a round of price hikes for paraffinic grades that went into effect mid-January. With the exception of San Joaquin Refining, other major naphthenic producers have not pushed up prices since November.

Suppliers maintain that demand is steady, and they anticipate customer orders will mount heading into March and April. Buyers are also expecting an uptick in requirements and are attempting to beef up their stock positions ahead of the spring season.

For the past year or so, consumers have maintained low stock positions, buying only necessary volumes for immediate business needs. But given a more positive outlook for the approaching spring fling, buyers anticipate taking on additional quantities in the coming months.

Although not as healthy as in 2006 to 2008, downstream segments appear to be improved from one year ago, thus lending support to current base oil buyers and sellers expectations.

Sources from both sides of the market emphasize that overall demand continues to lean more in favor of heavier grades such as N 500 to N 700 and bright stock, while the light vis grades remain less attractive to many buyers.

In industry news, the 5,000 barrel per day Cross Oil and Refining Smackover, Ark., naphthenic facility was taken offline for routine maintenance this past weekend. The company anticipates that normal operations will resume in about three weeks. Cross had prepared inventories in advance of the planned downtime to assure all customer requirements would be covered.

Looking upstream, crude oil prices took a turn higher on Tuesday, bouncing back over the $77 per barrel mark, a level not seen for almost two weeks. Analysts attribute the rise to an expected drop in oil inventories; the U.S. Energy Information Administration will release its weekly inventory report later today.

Despite the inventory decline anticipated in the EIA report, some experts say that stocks are still at the top end of the normal range.

A few analysts pointed to the oil spill in Port Arthur, Texas, last week, saying it could cause the oil inventory to decline even further. A collision between an oil tanker and a barge in Port Arthur prevented several crude carriers, carrying an estimated 7 million barrels, from coming into the United States.

Whatever the oil inventory level, some energy analysts are skeptical whether crude prices will remain in the high $70s/bbl. They suspect that prices will likely sink back into the $60s/bbl range.

At the close of the Tuesday, Feb. 3, NYMEX session, light sweet crude futures ended the day at $77.23 per barrel, a gain of $2.52 compared to the settlement reported one week earlier at $74.71/bbl.

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

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