The summer doldrums appear to have taken hold in the United States base oils market. Overall activity for the past week was viewed as quiet with little spot interest found. Suppliers did say that customers’ scheduled orders were being fulfilled and shipped as planned, but the tone was generally subdued.
In last weeks Lube Report, direct buyers revealed that ExxonMobil was planning to knock off an additional 10 cents/gal to all posted prices except 100 vis, which will lose 12 cents/gal, effective July 2.
Sources reiterated that the extended lead time of almost two weeks was unprecedented, as most effective dates for paraffinic adjustments are usually within a few days to a week of announcing. The base oils posted price chart below has been updated this week to reflect the changes to the said postings. Sources also pointed out that the ExxonMobil adjustments more-or-less now aligns all Group I posted prices.
It was also understood that issues at the Motiva Port Arthur, Texas, lube unit have now been resolved. Sources said that the impaired unit restarted over a week ago. The Group II major experienced a plant fire on May 12 which led to an unplanned downtime. Shortly after the operating problems erupted, Motiva enforced a 50 percent sales allocation on Star 6 (220 vis) on May 21. Sources said that the company is still maintaining the sales allocation for at least this week while Motiva attempts to replenish its inventory.
Meanwhile, Motiva will enter a planned turnaround on one of its three lube trains at the Port Arthur facility in mid-July. Downtime is expected to last approximately 25 days.
Market chatter suggests that overall supply/demand conditions remain balanced. There is perhaps some overhang of light vis grades compared to heavy vis cuts, which are generally tight on the paraffinic side. Naphthenic pale oils are mostly balanced to tight for all grades, sources indicated.
On the economic front, it was another roller coaster of a ride this past week. Stock markets are up, then down. The reasons for the instability are numerous, but analysts mostly put the blame on the prevailing uncertainty in Europe and the more recent bank issues in Spain and Greece.
European leaders are meeting Thursday and Friday in Brussels to consider proposals that would help Europes government debt problems, its banking sector and revive its sluggish economy.
At the close of the Tuesday, June 26, CME/Nymex session, front month light sweet crude oil futures ended the day at $79.36 per barrel, losing $4.67/bbl from last weeks settlement at $ 84.03.
Brent Crude was trading at $93/bbl at the end of the day yesterday, slashing $2.82/bbl off from its week-ago level at $95.82. LLS (Light Louisiana Sweet) crude was trading at a premium of about $12.35/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.