As crude oil prices sagged and uncertainty about the U.S. economy persisted, the outlook for base oil prices became more cloudy.
Crude prices, which jumped to $30 a barrel after Sept. 11 terrorism attacks in New York and Washington, D.C., are now sliding toward $20 a barrel on fears that the United States could tip into recession, dragging the global economy with it.
Base oil price postings in the United States were unchanged but suppliers avoided predictions about future prices.
“No [suppliers] want to do anything [with prices] because there’s so much uncertainty, both from the demand and supply side,” said one. “There’s just so much instability with the economy and then, on top of that, you have this added uncertainty due to the terrorist attacks. We just have to wait and see what’s going to happen.”
Suppliers agreed that the economy is likely to be the biggest factor affecting the base oil market. A recession would reduce demand for fuel, causing crude prices to fall and base oil prices to follow.
Amid such uncertainty, industry insiders said they did not worry much about effects from a Sept. 22 fire that disrupted operations at a Cit-Con refinery in Lake Charles, La.
“I don’t expect that to be very significant,” one large purchaser said. “My take is that there’s excess supply right now, anyway, so although a fire is never good news, this was probably as good a time as any to have one. These other things are going to have a much bigger determination on the market. We’re all just crossing our fingers and waiting to see what happens.”
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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