Some market observers compared this move to the one initiated by Flint Hills in early May, when the producer had also reduced prices of some of its grades by 10 cents/gal, in an isolated move that had so far not been replicated by other competitors.

No further adjustments surfaced, with a majority of producers commenting that a largely balanced supply/demand ratio allowed pricing to remain stable during the last several weeks.

While most participants agreed that May business had been generally healthy, some noticed the first intimations of the arrival of summer, when activity tends to slow down. A few sellers mentioned that they had received very few product inquiries over the last few days, and that it was difficult to predict whether June would be as busy as May as far as orders were concerned.

Even buying interest for exports appears to have abated compared to April, suppliers said. A tender held by Petroleos de Venezuela (PDVSA) was fulfilled with European product, a source said, as prices in that region were softening, while Indian appetite for U.S. base oils was also heard to have weakened.

The heavy grades continue to be in a tighter position in the U.S. market than the lighter slates, according to sources. The Group II heavy cuts are less readily available, partly because Chevron is still building its inventories following an extended outage caused by a fire at its Richmond, Calif., refinery last August. The Group II mid vis grades are largely balanced against current requirements. Conditions in the Group III segment were characterized as stable-to-soft, as supply of some of the cuts was outstripping demand, although May orders were above expectations, according to a supplier.

A similar market situation was observed on the naphthenics side, with steady demand and adequate supply providing support to stable pricing. Producers were keeping a watchful eye on feedstock prices, as base oils margins have been lean and significant fluctuations in crude oil and vacuum gas oil prices could spur a revision of the base oils price structure, they said, both on the naphthenics as well as the paraffinics side.

In related news, domestic automotive sales jumped in May, with manufacturers Ford, Chrysler, BMW and Nissan leading the pack in terms of sales gains compared to a year ago. U.S. consumers bought 1.4 million vehicles in May, up 8 percent from the same month in 2012, according to Autodata Corp. Analysts believe that a recovery in the automotive industry will help sustain the economys steady job growth.

At the close of the Tuesday, June 4, CME/Nymex session, front month light sweet crude oil futures ended the day at $93.31 per barrel, shedding $1.70/bbl from last weeks settlement at $95.01/bbl.

Brent Crude was trading at $103.25/bbl at the end of the day yesterday, down $1.14/bbl from $104.39/bbl a week ago.

LLS (Light Louisiana Sweet) crude was trading at a premium of around $8.90/bbl to WTI (West Texas Intermediate) crude on June 3.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.