U.S. Base Oil Price Report


Following the San Joaquin and Calumet price hikes issued in the U.S. base oils market last week, news of additional naphthenic increases emerged this week and range from 25 cents per gallon to 35 cents/gal. The paraffinic sector remains silent on price moves so far, but some consumers highly anticipate that stiffer postings will most likely materialize in the not-too-distant future.

Cross Oil said it plans to lift all its base stock and process oils between 25 cents/gal and 35 cents/gal on Friday, March 9. It is understood that the reasoning for the 10 cent range is due to the higher freight rates being passed on to customers that receive product on a delivered basis.

Ergon, the largest naphthenic producer, said it will roll out a 28 cents/gal increase across the board for its pale oils on Monday, March 12.

Nynas indicated that it likely would follow with a price announcement within the coming weeks. The company did say that it recently raised its European prices.

In terms of demand, the overall viewpoint from both the paraffinic and naphthenic sectors is somewhat mixed. There are a number of downstream segments that are experiencing robust activity while in other legs of the market, business has not yet reached its springtime potential, sources said.

All in all, sources agree that this year will most likely see better-than-average results when compared to activity in prior years, but may fall short of other more dynamic years past. The verdict is out, however, and some players agree that it is too early in 2012 to determine how business will be described or compared to previous years. Nevertheless, suppliers expect demand to kick-in by late March or early April.

Meanwhile, there remain concerns over the still-high operating costs that most producers are coping with. Many crude types, as well as vacuum gasoil values, are still considered lofty. Energy experts believe that these commodities will continue to firm in spite of the Dow dropping more than 200 points on Tuesday. Most financial platforms lost steam in the wake of renewed fears that the European and Chinese economies may be back sliding. Worries over Greece and a possible default this month helped lead the way for the down slide, analysts said.

At the close of the Tuesday, March 6, CME/Nymex session, front month light sweet crude oil futures ended the day at $104.70 per barrel, shedding $1.85/bbl from last weeks settlement at $106.55.

Brent crude was trading at $122.10/bbl at the end of the day yesterday, marginally up 37 cents/bbl from its week-ago level at $ 121.73. LLS (Light Louisiana Sweet) crude was trading at a premium of about $19.5/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.

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