Buyers and sellers describe the U.S. base oils market as steady this week. Demand continues to gain ground as market fundamentals remain in good balance and posted prices hold firm.
Despite recent softening of upstream costs, base oil suppliers hope that postings will remain stable following the last two months of price hikes. Sellers believe that overall balanced-to-tight availability against reasonably healthy demand should support current prices. While buyers appear to accept current prices, there are indications that if crude values continue to tumble, they would expect suppliers to lower prices.
Spot trading is limited, and there is not much room to negotiate lower spot prices, according to sources. Low-ball prices that may have been available late last year and earlier this year have since waned, buyers admitted.
Buyer interest for light vis neutrals remains particularly strong, while interest for heavier paraffinic cuts were not necessarily on spot buyers radar. For naphthenics, however, heavy-end pale oils drew strong interest and light and mid vis gradesare also buoyant.
Crude futures, the euro and stock markets all fell on recent news from the ongoing European Union crisis involving Greece.
Crude oil values had already given way to downward pressure after the Saudi Arabian Oil Minister Ali al-Naimi said the kingdom’s output was around 10 million barrels per day and that it was storing 80 million barrels in case of any disruption in supplies.
Analysts appear divided about the future of crude oil prices. Some believe a 10 percent decrease in value since the start of May is just the beginning of much lower prices. Others believe that the recent decline in oil prices is only temporary, and economic upheaval in Europe will drive crude prices back to over $100 per barrel in the near future.
At the close of the Tuesday, May 8, CME/Nymex session, front month light sweet crude oil futures ended the day at $97.01 per barrel, a whopping loss of $9.15/bbl from last weeks settlement at $106.16.
Brent crude was trading at $112.91/bbl at the end of the day yesterday, shedding $6.74/bbl from its week-ago level at $119.65. LLS (Light Louisiana Sweet) crude was trading at a premium of about $16/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.