U.S. Base Oil Price Report

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U.S. base oil producers are striving to place product before demand starts to wind down as the last quarter of the year quickly approaches, with some competitive offers heard to have surfaced.

While a majority of suppliers report fairly constant requirement levels and steady pricing this month, following the latest round of posted price decreases, the current drive to find a home for product foreshadows the typical slowdown that occurs towards the end of the year when producers work hard at lowering inventories and buyers also prefer to keep lean stocks.

It was heard that a couple of major suppliers had been active in the barge market, with offers understood to be at least 10 cents per gallon below already discounted posted prices.

Most producers are keeping a close eye on contract shipments and will do their best to protect existing accounts, sources said.

Suppliers expressed a certain degree of concern regarding the expected decline in November and December, and commented that production rates may have to be adjusted if the market is oversupplied, but this remains to be seen.

On the naphthenic front, supply and demand are largely balanced, with no unusual pricing activity reported, following the implementation of a 10 cent/gal price reduction across the board in late August/early September.

The only segment that has seen a slight slump in requirements is the export sector, a supplier said, as global base oil demand in general has seen some weakening in recent weeks.

In terms of production, most plants appear to be running at full rates. The LyondellBasell refinery in Houston, Texas, which has a capacity of 3,600 barrels per day of pale oils, is expected to have a thirty-day turnaround in October, sources said, while Calumet plans to complete a maintenance program at its Princeton, La., unit in January. The plant can produce 6,900 gallons per day of naphthenic oils.

Upstream, West Texas Intermediate crude futures rallied after the U.S. and its Arab allies began airstrikes against the Islamic State militants in Syria.

WTI settled on the CME/Nymex at $91.56 per barrel on Sept. 23, down $3.32/bbl from a settlement at $94.88/bbl on Sept. 16.

Brent crude was trading around $96.97 per barrel on the CME on Sept. 22, up 32 cents/bbl from $96.65/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.

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