ExxonMobil yesterday announced an across-the-board price reduction of 7 cents per gallon in base oil prices, a move expected to spur similar cuts by other U.S. suppliers.
If other major producers follow suit, it would mark the second round of price cuts in six weeks. Industry insiders have predicted this, citing a 25 percent drop in crude oil prices since September.
Its no surprise at all, one large base oil purchaser said. Given how much crude has fallen, I think seven cents is a fair adjustment.
Other principal U.S. suppliers reached yesterday said they had not yet decided their own moves. Still, there was consensus that the market will follow the lead of ExxonMobil, which holds 29 percent of the nations base oil capacity.
Assuming that other suppliers do lower prices, one marketer said it is difficult to predict whether any other changes are in store as the lubricants industry enters its typical winter slowdown.
Were entering that seasonal cycle, where things tail off through the end of the year, he said. Normally prices hold through that cycle but its hard to say what will happen, as much as crude has fallen.
Crude prices actually rose Tuesday, with Januarydeliveries closing up79 cents to $19.48 per barrel on the New York Mercantile Exchange. (The price fell back again in after-hours trading.) Observers attributed the increase to remarks by President George W. Bush, which some interpreted as indications that Washington may turn its war on terrorism toward Iraq.
Historic U.S. posted base oil pricesand WTI and Brent crude spot prices are available for purchase in Excel format.
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