U.S. Base Oil Price Report

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The U.S. base oils market was eerily quiet this week, with prices assessed as stable and suppliers seeing little reason to introduce a price initiative of any kind at the moment.

Demand was characterized as generally stable by a majority of sellers and inventories remained on the lean side, with a number of suppliers reiterating that certain segments of the market were moving swiftly, while others appeared to have fallen into a summer lull.

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On the paraffinic front, for instance, the heavy vis cuts remained the most popular kids on the block, and as a result, spot prices for these grades have experienced the least erosion over the last couple of months, while supplies remain the tightest, according to sources.

Meanwhile, in the naphthenic segment, availabilities are also tight against demand, with the main draw coming from the transformer oil area. Despite the fact that naphthenic base oils have not undergone any changes in postings since November of last year, participants reported an increase in spot pricing, given the snug supplies and low inventories across the board.

Price ideas (incorporating both spot offers and contract prices) for paraffinic base oils were discussed within the following ranges: For the API Group I base oils, light vis cuts were heard at $3.22/gal to $3.32/gal FOB; mid vis cuts at $3.40/gal to $3.55/gal FOB; heavy vis cuts at $3.90/gal to $4.30/gal FOB, and bright stock at $4.05/gal to $4.22/gal FOB.

Regarding Group II, prices were assessed at similar levels to those in Group I, with light vis cuts quoted at around $3.25/gal to $3.35/gal FOB, mid vis cuts at $3.42/gal to $3.62/gal FOB and heavy vis grades at $4/gal to $4.22/gal FOB. Price ideas may vary depending on the supplier, product and quantities.

Pale oil values were assessed at $3.54/gal to $3.71/gal FOB for 100 to 750 vis cuts and for general purpose applications. The 60 vis cut, used mostly in the manufacture of transformer oil, was heard at around $3.90/gal to $4/gal FOB. Heavy pale oil prices were discussed at similar levels as the transformer oil grade in the high $3s/gal. Specialty pale oils and other niche applications commanded premiums from 50 cents/gal to $1/gal over mainstream applications.

A few buyers continued to seek additional base oil volumes to build inventories as part of a contingency plan in the event of severe storms or hurricanes. The second tropical storm of the 2013 Atlantic hurricane season, Tropical Storm Barry, made landfall in Mexico on June 20, but was expected to spare U.S. Gulf oil and gas infrastructure.

In other news, stocks succumbed to concerns about an imminent easing by the U.S. Central Bank of its stimulus policies. The Dow fell 352 points on June 20 in the worst loss of 2013, while the S&P and Nasdaq dropped by 2 percent.

WTI (West Texas Intermediate) crude settled on the CME/Nymex on Tuesday, June 25, at $95.32 per barrel, $3.12/bbl down from last weeks settlement at $98.44/bbl.

Brent Crude was trading at $101.26/bbl at the end of the day yesterday, down $4.76/bbl from $106.02/bbl a week ago.

LLS (Light Louisiana Sweet) crude was trading at a premium of $7.90/bbl to WTI on June 25.

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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