The downward adjustments on base oil postings convened at the beginning of the year helped ignite some buying interest at the end of January and early February, and suppliers noted a healthy string of orders coming in. One supplier said that demand had been pretty sound over the past week, and others concurred, but there were also some reports that requirements had sputtered along for two weeks, and then had gone quiet again.

Demand is at a steady pace, and it will take a few weeks to see whether it will really pick up, or whether the slight increase in orders was simply a reflection of the posting decrease, a supplier commented.

While some consumers were carrying fairly lean inventories since year-end and had therefore returned to the market to secure more product, others seemed to have pursued a buying pattern that was not out of the ordinary. A couple of sellers felt that customers had continued buying the same quantities as usual, and that there was no sudden jump in requirements as a result of the lower prices.

Spot trading appeared to have calmed down too, as the posted price decreases were offering enough incentive to buyers, but export activity was still quite strong. Participants said that U.S. product continued to move to Mexico and India at consistent rates and that this was helping keep more balanced inventories on the domestic front. Asian producers who typically sell into India said that it was difficult to compete with product from the U.S. as prices were quite attractive, especially for some API Group II cuts. One producer is abstaining from participating in the spot market altogether because of weather-related refinery interruptions during the month of January.

Sources also heard that European buyers were eagerly awaiting the introduction of the new Group II capacity from the Chevron plant in Pascagoula, Miss., early in the second quarter because a large portion of that output was expected to be exported to the Old Continent. The extra supply is anticipated to impact not only Group II prices in Europe, but Group I prices as well, according to sources.

On the naphthenic side, there were no significant fluctuations in terms of prices, and U.S. suppliers saw no reason to try to alter the current status quo. However, there has been a slight pick-up in demand this week as buyers position themselves for the potential shortages that could occur in March/April during upcoming turnarounds. Prices were expected to hold through February, but suppliers may reassess the situation in March, sources said.

In production, Calumet has decided to delay the turnaround at its Shreveport, La., paraffinic base oil plant, which was originally scheduled for March. Given some weather-related interruptions that the producer faced in January, it was not able to build sufficient inventories to cover for the production shortfall during the turnaround. The shutdown has been rescheduled to start on April 28 and run through the middle of May.

Calumets naphthenic turnaround in Princeton, La., remains on schedule for mid-March, but will only run for one week. The company will perform a shortened turnaround due to other planned naphthenic turnarounds scheduled over the same time period. Calumet will likely schedule a more detailed and longer turnaround at the Princeton plant in late summer or early fall.

Upstream, West Texas Intermediate crude futures breached the $100 per barrel mark on signs of an improving U.S. economy and increased bank lending in China, while stocks registered their best week of 2014, following a largely dismal streak.

WTI settled on the CME/Nymex at $102.43 per barrel on Tuesday, Feb. 18, up $2.49 from a settlement at $99.94/bbl on Feb. 11.

Brent crude was trading around $110.46 per barrel on the CME, up $1.78 from $108.68/bbl a week ago.

LLS (Light Louisiana Sweet) for March delivery was trading at a premium to WTI of around $6.15/bbl on Feb. 7, compared with $5.50/bbl on Jan. 28.

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