U.S. Base Oil Price Report


The U.S. base oils market welcomed the New Year on a positive note. Sellers are pleased that demand continues at a fairly healthy pace, while overall availability is balanced to tight. Posted prices are holding for now, but some players sense upward pressure due to building operating costs.

Participants expect the first quarter of 2011 to be more active than years past. Even though buying interest slowed slightly in the latter part of 2010, it has remained healthier than some suppliers anticipated and is gaining momentum as this quarter progresses.

The only downside is the number of turnarounds scheduled during the first three to four months of this year. In most cases, and whenever possible, producers planning downtimes are preparing inventories to satisfy customers needs. Despite producers attempts to beef up stocks, however, the outages could limit some regular orders being fulfilled and will most likely curb spot buying.

As crude oil prices busted through $92 per barrel on Friday and Monday during intra-day trade, futures lost their grip and retreated back into the $88 to $89/bbl territory on Tuesday. Sources pointed out that oil prices have been at fairly lofty levels for the past month.

Even though paraffinic suppliers raised prices in early December by an average of 25 to 30 cents per gallon for most grades, some players speculate that another increase could be forthcoming given current market fundamentals – strong demand against limited availability and rising feedstock costs.

Since the beginning of January 2010, overall posted prices have increased by an average $1 to $1.15/gal for API Group I/ II and III light and mid vis paraffinic grades, while heavy vis cuts have risen by an estimated $1.30/gal. Bright stock values have gained the most, rising $1.45/gal in the past year.

Naphthenic values have been pulled up, on average for all pale oils, by 70 cents to 75 cents/gal over the last 12 months.

Presently, spot or non-specialty price ranges for light vis 60, 100 and 500 pale oils are pegged in a range of $3.32 to $3.42/gal. Price ideas for 1200 are heard near $3.50 to $3.58/gal, and 2000 at $3.83 to $3.90/gal. Niche and/or specialty market prices are said to be anywhere from 50 cents to $1.10/gal higher than the spreads above, depending on end-use, quantities and supplier, according to key sources.

At the close of the Tuesday, Jan. 4, NYMEX session, front-month light sweet crude futures ended the day at $89.38 per barrel, a loss of $2.11 compared to the Dec. 28 close at $91.49/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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