With many U.S. players at ILMAs annual conference in Florida this week, activity was low key. The market, largely balanced, saw no posted price moves, but one posting was discontinued.
SK pulled its posted price for Yubase 4 plus, its API Group III+ base stock. The company explained that it has limited availability of that cut and does not expect this situation to improve going forward.
Overall day-to-day trade slowed with many participants away from their desks. A few sources said demand for premium Group II and III products is fairly strong, but availability continues tight.
Sources expect that many Group II and III neutrals will remain snug, as a number of turnarounds are planned during quarter four and through the first half of 2012.
The same snugness does not necessarily apply to Group I and naphthenic oils. For some months there have been signs that a few sellers could readily provide certain cuts, such as bright stock along with a few other solvent neutrals, as well as a range of pale oils.
Insiders were quick to say that even though length in certain grades has materialized, it does not mean that the U.S. supply situation is sloppy, nor do U.S. producers expect this to occur. In some cases, production rates have been throttled back to match slowed demand, they added.
Meanwhile, regarding the naphthenic spot values that were mentioned in last weeks U.S. Base Oils Report, it should be noted that ranges of $3.55 per gallon to $3.75/gal FOB for light and mid vis grades and $3.80 to $4.10/gal FOB for heavier cuts are indicative of pure spot activity and mostly involve shipments ex-U.S.
Sources say that pale oil values had obviously come down following decrease initiatives by Ergon, Calumet and Cross several weeks ago. Those discounts impacted both regular ongoing business as well as spot offers.
But despite the recent 10 to 15 cent per gallon decreases, players from both the buy and sell sides agree that regular ongoing business and contract transactions remained more stable than spot offers. Suppliers added that steeper discounts for spot offers are directed mainly at exports, while they try to keep domestic business at a more consistent level.
There has been no noticeable change to feed stock concerns, as most base oil producers are still dealing with unyielding upstream costs.
At the close of Tuesdays Oct. 18, CME/NYMEX session, front month light sweet crude oil futures ended the day at $88.34 per barrel, a gain of $2.53 from the week-earlier settlement at $85.81/bbl.
Brent crude ended the day at $111.87, gaining $1.07/bbl compared to its week-ago settlement at $110.80/bbl. LLS (Light Louisiana Sweet) crude was fetching around a $25.5/bbl premium to WTI on Tuesday.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.