This week ushered in the welcome news that Motiva has completed its extended turnaround in Port Arthur, Texas, promising relief to the U.S. base oil market in coming weeks.
The planned downtime, which commenced in late May, focused on maintenance performed on one of three base oils trains at the 40,300 barrel per day API Group II plant. Sources said that the Motiva startup is in its early days, and it will likely take the producer about a week before the unit is back to its full potential. A direct buyer of Motiva Group II product said that large volumes should not be expected to ship until early August.
Motiva had informed its customers in early July that there would be an unfortunate delay of approximately two weeks in resuming production at the train undergoing maintenance, which pushed back the restart to this week.
Although Group II availability is still deemed very snug, there should be some improvement realized in coming weeks, thanks to Motiva coming back on stream. Perhaps the downside to this good news, however, is that the major producer continues on a sales allocation program on several grades.
Group III cuts remain very tight and will likely remain as such through the end of the year, according to buyers. Sources suggested that Group I base oils are generally balanced to tight, and availabilities of most grades are in a slightly better shape than several months ago.
Otherwise, demand for base oils in the U.S. is described as steady, albeit somewhat relaxed when compared to the very robust pace seen in May-June. A much-needed quiet spell is what some producers had hoped would emerge, and their wish seems to have come true as activity has slowed over the past few weeks.
For suppliers, the anticipated slowdowngivesthe ability to try and replenish stock positions, which had become extremely depleted during the second quarter.
Buyers on the other hand say they are receiving most of their contract requirements. The exceptions would be where producers are maintaining their sales allocation/control programs or customers are seeking additional volumes over and above pre-scheduled quantities. In the latter cases, suppliers contend that they cannot offer extra volumes and are not entertaining new business nor making volumes available to the pure spot market.
At the close of the Tuesday, July 19, NYMEX session, front-month light sweet crude futures ended the day at $97.50 per barrel, a marginal gain of 7 cents from the previous weeks settlement of $97.43/bbl.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.