The U.S. market was quiet the past week, partly because of buyers and sellers attending the Independent Lubricant Manufacturers Association meeting in Scottsdale, Arizona, and partly because of uncertainty about the direction of prices.
No further posted price movements were reported, following Motivas decrease and Phillips 66s increase on Oct. 4, but there were reports that a number of suppliers had followed ExxonMobils lead and had granted temporary voluntary allowances (TVAs) and discounts to selected large accounts to remain competitive.
According to sources, a few reductions were thought to have been awarded, as some contracts are linked to Motivas posted price movements, even for customers who do not secure product from Motiva.
Other suppliers decided to take time to assess market conditions and observe crude oil fluctuations before making any decisions regarding pricing.
Many participants were hesitant to revise pricing – particularly in the API Group II segment – given that crude values have moved up in recent weeks, and there is an extended turnaround taking place at Chevrons base oil plant in Richmond, California.
There were also unconfirmed reports that ExxonMobil would be shutting down its Baytown, Texas, refinery for a turnaround in late October/early November. The base oil plant at the refinery has capacity to produce 9,800 b/d Group I and 18,200 b/d Group II base oils, according to LubesnGreases Global Guide to Base Oil Refining.
Activity on the naphthenic front was steady, with no price changes reported and demand deemed at expected levels for this time of the year.
Upstream, crude oil futures stalled on concerns that not all OPEC members would agree to an output freeze at a Nov. 30 meeting.
Furthermore, the International Energy Agency (IEA) reported that global crude oil supplies increased by 600,000 barrels per day in September, primarily due to a rise of half a million barrels from Russia and Kazakhstan.
WTI futures on the CME/Nymex settled at $50.29 per barrel on Oct. 18, down 50 cents per bbl from the Oct. 11 settlement of $50.79 per bbl.
Light Louisiana Sweet wholesale spot prices closed at $51.45 per bbl on Oct. 18, according to data from the U.S. Energy Information Administration.
Brent was trading at $51.52 per bbl on the CME on Oct. 18, down 89 cents/bbl from $52.41 per bbl on Oct. 11.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.