Sources said that the motive behind the ExxonMobil price action was the critically short supply situation against strong demand. Sources also pointed out that ExxonMobils effort to bring consistency to its global pricing may have been a factor in moving its U.S. postings.

Whether other producers will follow the ExxonMobil move remained unclear at this juncture. However, there were some subtle hints that postings had room to move higher given the present market fundamentals, a few buyers lamented.

Several base oil consumers claimed they were stupefied by ExxonMobil announcing its plans to raise posted prices, referring to the recent U.S. Senate tax breaks hearings for oil companies – noting that this is a very controversial subject. During last weeks hearings, it was brought up that the major oil companies are making huge profits and still benefit from tax incentive programs. Whether or not these tax breaks should be abolished is not a new subject matter and remains a very hot topic among both political parties. Oil companies top chiefs collectively said they just want the same tax advantages enjoyed by other industries.

Meanwhile, several planned turnarounds have recently been completed or are about to commence, helping keep many grades in tight supply. These, combined with recent unplanned outages and incidental downtimes, have pushed stock positions lower for both producers and consumers. In addition,a number ofproducers continue to operate under sales allocation or control programs, as demand continues.

U.S. base oil buy-side sources also pointed out that crude oil values have dropped again this week, falling from their recent highs around $114 per barrel a few weeks ago to circa $97 per barrel. Some players argue that the price of crude oil remains somewhat irrelevant; more important, the cost of vacuum gas oil remains at a significant premium over the price of the benchmark crude.

Repercussions from the swollen Mississippi River continue as the crest moves toward the Gulf of Mexico. Some players express concern that several large refineries, terminalling facilities and other oil-related manufacturing plants located in the Louisiana and Mississippi coastal region may be in jeopardy.

At the close of the Tuesday, May 17, NYMEX session, light sweet crude futures ended at $96.91 per barrel, a loss of $6.97 compared to the May 10 settlement at $103.88/bbl.

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