U.S. Base Oil Price Report

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U.S. base oil participants appear to be taking a breather this last week of 2010. Sources suspect that despite generally quiet market conditions, both sides are preparing for a fairly active New Year.

Many suppliers concur that they are ending the year with well-balanced inventory positions alongside better-than-expected orders for the coming months. Certain grades will continue to be tighter than others and could possibly grow even tighter as the first quarter unfolds.

Buyers say that for the most part they have secured much of their requirements for January. But they agree that its increasingly difficult to obtain all necessary volumes of certain cuts – mainly heavy vis grades. They noted that these hard-to-find base oils will likely be even more difficult to source as the spring buying season kicks in.

Meanwhile, crude oil values are holding at high levels in the low $90s per barrel range – levels that have not been seen for about two years. Insiders offer a mixed bag of ideas of what might be expected in the coming months.

Some energy analysts are expecting crude to burst through the $100 per barrel mark in 2011, although some trepidation is attached to their expectations, considering the still somewhat shaky economic recovery. Other energy experts see little change, while yet a few others anticipate that values may ease back toward to the $80 per barrel level.

This week crude darted over $91 per barrel on a weaker U.S. dollar and very cold weather across the northeast and throughout Europe. Some market watchers believe that cold temps may prevail for a longer period than normal, which could drive crude oil values higher.

At the close of the Tuesday, Dec. 28, NYMEX session, front month light sweet crude oil futures ended the day at $91.49 per barrel, a gain of $1.67 from the week earlier settlement at $89.82/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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