U.S. base oil market activity is deemed steady, although somewhat quiet on the surface.
Key players view business as normal for late February; suppliers reiterate that sales are building week-on-week. Although postings are unchanged this week, price ideas are seeing upward pressure due to rising crude oil values.
Both buyers and sellers agree that contractual commitments are moving along smoothly and picking up steam as March approaches. Deliveries are largely on time despite a handful of downtimes underway. Producers whose facilities were or are impacted by a turnaround have beefed up stocks in advance to cover all customer requirements.
Meanwhile, market players’ chatter has heightened over the possibility of base oil prices rising. Producers are keeping a close eye on upstream developments. Feedstock costs are trekking higher on the back of steeper crude oil values.
Some regular naphthenic exports may have been curtailed or temporarily halted in recent weeks, said supply sources. They pointed out that these disruptions were due to the ongoing angst in Europe, as Europe continues to work on its financial recovery and other related regional crises. These sources added that the delayed pale oil shipments to Europe would likely pick up soon and that this has not affected domestic activity.
Brent crude prices have recently firmed and reached the $120 per barrel mark on Tuesday. Prices for Brent have not been above $120/bbl for over a year. In its run higher, stronger Brent numbers have pulled up other crude types as well, including a number of foreign and domestic oils that are used in U.S. refineries.
The increase in oil prices was largely attributed to fresh Iranian concerns. On Sunday, Iran’s oil ministry said that it would stop exporting oil to British and French companies. This announcement came just days after Iran warned it may disrupt supplies to some European Union countries in retaliation for sanctions put in place by the EU and United States.
At the close of the Tuesday, Feb. 21, CME/Nymex session, front month light sweet crude oil futures ended the day at $105.84 per barrel, up $5.10 /bbl from last weeks settlement at $100.74.
Brent crude was trading at $121.17/bbl at the end of the day yesterday, up $3.73/bbl from its week-ago level at $117.44. LLS (Light Louisiana Sweet) crude was trading at a premium of about $17.5-18/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.