U.S. base oil suppliers appear to be starting to lean toward price cuts as American attacks in Afghanistan and the OPEC cartel fail to revive crude oil prices.
Although posted prices of major suppliers remained unchanged, several marketers said that current crude prices – hovering in the range of $21-$22 per barrel – may justify markdowns. In the face of economic and political volatility, however, none would predict when a price cut might occur.
As much as crude has come down, I would think theres some credence for a nickel [per gallon] decrease, one supplier said. He added, however, that any change would probably depend on the markets volume leader, ExxonMobil Corp. No one else is going to lead a price change when theyre so dominant and theres no telling what theyre going to do.
Crude prices have fallen approximately 20 percent over the past month but base oil suppliers have maintained their prices, at least in part because of anticipation of American retaliation for Sept. 11 terrorist attacks and uncertainty about how that campaign would affect petroleum prices. But crude prices barely budged after U.S.-led attacks on Afghanistan began Sunday. OPEC members have reduced output in an attempt to buoy prices, but also without success.
Base oil suppliers are now speculating about the possibility of crude prices remaining low.
If you look back over time, there have been long periods when base oil refining margins were in the range of what they are now, one supplier said. That suggests that prices may stay where they are, even though crude has come down quite a bit. But there have also been long periods when margins are much lower. So its difficult to say. I think the prognosis is tilting toward a reduction in [base oil] prices.
Historic U.S. posted base oil pricesand WTI and Brent crude spot prices are available for purchase in Excel format.
|