Many business discussions seem to be taking place in the base oil market, but few deals are completed because buyers hesitate to accept current offers.
While there have not been any posted price changes this week, customers are concerned that base oil values may weaken in the next few weeks and they prefer not to commit to large volumes.
Fluctuating crude oil prices and the conclusion of the summer season – when base oil demand typically tends to slow down – are starting to exert pressure on pricing, particularly on those grades that are more plentiful.
Sources said that the low-viscosity cuts are slightly long, while the high and mid-vis grades continue to be tight against current requirements.
Demand on both the paraffinic and naphthenic sides continues to be described as steady, with suppliers reporting average sales volumes this month.
Consumers seem to be comfortable with existing inventories and are not in a hurry to secure large shipments until price direction becomes clearer, sources said.
There is still buying appetite for exports and some players are looking for lower offers, but producers for the most part are digging in their heels, trying to avoid a price decline for spot transactions.
Upstream, crude oil futures moved up as talk abounded regarding the possibility that the Organization of Petroleum Exporting Countries may consider a production freeze during their meeting in late September.
WTI futures settled on the CME/Nymex at $42.77 per barrel on Aug. 9, up $3.26 per bbl from the Aug. 2 settlement of $39.51 per bbl.
Light Louisiana Sweet wholesale spot prices closed at $44.71 per bbl on Aug. 8, up from $41.68 per bbl on Aug. 1, according to data from the U.S. Energy Information Administration.
Brent was trading at $44.98 per bbl on the CME on Aug. 9, up $3.18 per bbl from $41.80 per bbl on Aug. 2.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.