After a busy autumn, the U.S. base oil market appears to be settling in for hibernation, with suppliers downplaying the likelihood of further price movements for the foreseeable future.
Valero Energy Corp. this week confirmed that it lopped 7 cents per gallon off all of its posted prices, effective Dec. 3. Its action completed the second round of price cuts by all principal U.S. suppliers since mid-October.
Marketers said they do not expect to lower prices again any time soon.
It looks to me like supply and demand are fairly balanced right now, one marketer said. I dont see any further deterioration of prices in the offing.
Some lube blenders are holding out hopes that a seasonal lull in lubricant production could push base oil prices lower yet.
This time of year is typically pretty flat, said an official with a mid-sized Midwestern blender. It doesnt seem like the slowdown is any more severe this year than usual. But we have seen a little bit of deal-making and to me that indicates there might be another price movement.
Another base oil supplier, however, had a different interpretation of spot deals, saying marketers would use them to avoid the need for posted price reductions.
If anyone has an inventory issue with a particular grade, theyll make a deal to export those barrels, he said. Overall, I think things are pretty stable right now.
Historic U.S. posted base oil pricesand WTI and Brent crude spot prices are available for purchase in Excel format.
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