While requirements have been healthy, some suppliers conceded that there has been a barely noticeable downturn in the last few days, and this could signal the start of the typical summer lull, when orders slow down because demand from downstream segments also declines. As one participant aptly described it: There is a feeling of summer swoon in the air.

However, a couple of other sellers commented that they had not noticed any changes in demand at all, even as the market heads into July, when the pace tends to be more sedate.

Within the API Group I segment, producers have been able to meet contract requirements without any problems, but spot cargoes are still difficult to locate. One producer acknowledged that it is staying balanced without being in the spot market. Most sources agreed that the heavy-vis cuts and bright stock were the least available within the Group I category.

The Group II sector is slightly tighter because of the turnaround at the Excel Paralubes Group II base oil unit in Westlake, La., which is expected to last approximately 58 days. The latest update received points to the fact that the shutdown process at the 22,200 barrels per day facility has already started. The plants output is shared by Flint Hills Resources and Phillips 66.

The two suppliers have built inventories to cover requirements during the turnaround, but have abstained from participating in the spot market over the last several weeks in order to be able to store product. One of the suppliers assured customers that there is plenty of base oil in storage and, barring a major issue during the restart process, orders would be fulfilled as agreed during the next few months.

There are also fresh reports that the new Chevron 25,000 b/d Group II plant in Pascagoula, Miss., is up and running, but the market will likely not see much of this oil for another month as the producer needs to fill its lines of supply, sources said.

As far as the Group III oils are concerned, prices have not undergone any adjustments during the latest round of increases for Group I, II and II+ in late May/early June. Demand remains steady, although it could go flat for the remainder of the summer and then fizzle out as the market heads into the fall, participants said.

Meanwhile, base oil producers are keeping an eye on crude oil and feedstock vacuum gas oil prices, as unrest in Iran and Syria is causing prices to remain volatile.

However, West Texas Intermediate crude rose for the first time in four days as Chinas Purchasing Managers Index registered the fastest pace of manufacturing expansion in that country this year.

Additionally, producers along the U.S. Gulf Coast were watching the weather because this years first tropical storm was starting to form in the Atlantic.

WTI settled on the CME/Nymex at $105.34 per barrel on July 1, down 69 cents from a settlement at $106.03/bbl on June 24.

Brent crude was trading around $112.29 per barrel on the CME, down $2.17 from $114.46/bbl a week ago.

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