U.S. Base Oil Price Report


With demand unchanged and inventories still described as balanced to tight, U.S. base oil players have partly turned their attention to developments in the crude oil market.

West Texas Intermediate futures tumbled on Tuesday, hitting three-month lows below $43 per barrel as worries over a gasoline glut outweighed expectations of U.S. crude stock drops.

WTI futures settled on the CME/Nymex at $42.92 per bbl on July 26, down $2.02 per bbl from the July 20 settlement of $44.94 per bbl.

Light Louisiana Sweet wholesale spot prices closed at $43.80 per bbl on July 25, according to data from the U.S. Energy Information Administration.

Brent was trading at $44.87 per bbl on the CME on July 26, down $2.30 per bbl from $47.17 per bbl on July 20.

Volatile crude oil numbers could be the one factor impacting base oil values in coming weeks, if other conditions such as requirements and availability remain unchanged, market sources said.

However, for the time being, base stock postings remain stable and there was little discussion about potential adjustments, particularly as many players remain away during the summer holiday period.

Looking ahead, there is concern that demand would start to slow down going into August. While most sources agreed that they had not seen indications that this would be the case, one source noted that requirements were steady at best, while another described demand as flat for the second half of July.

Some sellers reported fairly healthy export movements, although buying interest from Mexico – which had been quite evident in recent weeks – seems to be losing some steam, and European appetite for U.S. material is expected to slow down in August, as this is when many participants go on holiday.

Spot numbers have increased steadily over the last couple of months due to tight supply conditions in the domestic market, but did not move up to the same extent as posted prices, which were last lifted in May and June, sources explained.

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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