U.S. Base Oil Price Report

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While base oil demand is described as healthy, lower crude oil prices and high gasoline stocks in the U.S. are driving buyers to show some restraint in ordering base stocks.

Sellers continue to report a steady stream of orders but a few consumers, brokers and traders are hesitant to secure large cargoes, as there is concern base oil prices could slip in coming weeks.

This situation seems to be affecting the spot segment to a certain extent – with pressure emerging on spot indications in particular – but there has been no discussion about posted price adjustments this week.

Refiners are expected to fend off decreases as long as possible, since they are still trying to recover from lean margins earlier this year.

Despite the fact that base oil prices increased in May and June, and the latest drops in crude oil values have helped strengthen margins, there is still need for improvement.

Fairly snug supply for most base oil grades is offering support to current price levels, sources noted.

The heavy-viscosity cuts are the tightest, while mid-and light-vis grades are generally balanced against demand. The 60/70/75 vis cuts seem to be more readily available and sellers appear fairly eager to place volumes, according to sources.

On the naphthenics side of the business, demand continues to be described as steady, with no price changes mentioned this week.

Future price movements both for naphthenic and paraffinic base oils hinge largely on developments in the crude oil and refined products segments.

West Texas Intermediate futures fell by more than 1 percent on Tuesday, wiping early gains and pushing U.S. crude below the $40 per barrel mark for the first time since early April on concerns about a glut in gasoline and other refined products.

There is also concern that data slated to be released later in the week would show not only a rise in overall U.S. crude inventories, but also in supply at Cushing, Oklahoma, the delivery point for Nymex futures.

WTI futures settled on the CME/Nymex at $39.51 per barrel on Aug. 2, down $3.41 per bbl from the July 26 settlement of $42.92 per bbl.

Light Louisiana Sweet wholesale spot prices closed at $41.68 per bbl on Aug. 1, down from $43.80 per bbl on July 25, according to data from the U.S. Energy Information Administration.

Brent was trading at $41.80 per bbl on the CME on Aug. 2, down $3.07 per bbl from $44.87 per bbl on July 26.

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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