U.S. base oils players welcomed the new year with open arms this week. The outlook appears bright as supply/demand fundamentals are expected to remain balanced – if not tightened – during this first quarter of 2012.
Despite slowing demand over the past few months, seasonal buying will likely take hold in the near future, according to base oil suppliers. This is a time when blenders, packagers and other finished lubricant manufacturers usually beef up their base stock requirements and other necessary components ahead of the spring fling.
However, sources indicate that tight availability may emerge sooner rather than later as a number of turnarounds are scheduled during the first three to four months of this year. In most cases, and whenever possible, producers planning downtimes are preparing inventories in advance to satisfy customers needs. Despite these attempts, planned outages could impede any potential spot buying.
Overall availability had been extremely tight during much of last year, and December ended with Group II and III grades still on the tight side. Any unforeseen operational hiccup could weigh heavy on the minds of the entire marketplace if this were to happen, noted a few observers.
Meanwhile, a clean sweep of API Group I posted prices has now been completed. As mentioned last week, Calumet announced its intention to jump on board with decreases of 20 cents per gallon and 25 cents/gal for its line-up of Group I grades. Effective today (Wed., Jan. 4), Calumet reduced its 700 solvent neutral by 25 cents/gal and lowered its bright stock price by 20 cents/gal. The price chart now reflects the changes.
As reported in Lube Report over a year ago, Motiva ceased production of its Star 3 Group II 70 vis and its Star 5+ Group II+ 130 vis grades effective Jan. 1, 2012. The company had provided customers with 15 months advance notice. When Motiva announced the changes in 2010, the company said it planned to focus on areas that complement our processing capabilities and operating efficiencies as well as the needs of the marketplace. Please note that the price chart also reflects the removal of two Motiva postings.
At the close of the Tuesday, Jan 3, CME/Nymex session, front month light sweet crude oil futures ended the day at $102.96 per barrel, up $1.62/bbl from last weeks settlement at $101.34.
Brent crude was trading at $112.22/bbl at the end of the day yesterday, up $3.16/bbl from its week-ago level at $109.06. LLS (Light Louisiana Sweet) crude was trading at a premium of about $9.60/bbl 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.