U.S. Base Oil Price Report


The base oil market remains stable, with some buyers optimistic about signs of growing demand early this year. On the naphthenic side, some turnarounds are expected in the coming months.

According to sources, at least two naphthenic plant turnarounds are planned in the United States later in the first quarter of 2012, which they suggest could tighten supply.

Some report base oil buying demand has ramped up early this year, compared to where it was in 2011s fourth quarter, possibly driven by some events occurring in Europe and Asia. The perception is the market is ahead of its pace from a year ago. This has given some base oil players a sense of optimism about the market in terms of customer response.

Some industry observers suggest the domestic market is gradually picking up, noting that refiners running at reduced crude rates due to fuels margins will likely help balance the base oil supply.

Other sources believe supply volume currently far outstrips demand in the U.S. base oil market, with questions remaining about what impact the U.S. economys situation will have on demand going forward.

Observers suggest any excess in terms of base oil margins may have been propped up by vacuum gas oil prices during the month of January, and that rising VGO prices could eventually impact base oil prices.

According to some industry sources, the base oil export market has picked up early in the new year after being extremely soft from November into the new year.

At the close of the Tuesday, Jan 17, CME/Nymex session, front month light sweet crude oil futures ended the day at $100.71 per barrel, down $1.53/bbl from last weeks settlement at $102.24.

Brent crude was trading at $111.57/bbl at the end of the day yesterday, down 91 cents/bbl from its week-ago level at $112.48. LLS (Light Louisiana Sweet) crude was trading at a premium of about $9.25/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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