Certainly there are a variety of factors affecting base oil prices, but crude had dropped to the point that we were really anticipating a reduction in base oil prices, said a procurement official for one large lubricant maker. To tell the truth, I thought prices would drop more than a nickel. In my mind, if crude stays where it is, there could be another cut.

Since ExxonMobil lowered its posted prices early last week, every major U.S. base oil supplier except Citgo has done likewise. (Citgo officials said they would consider reductions during a meeting planned for today.)

The price cuts came after crude oil prices fell approximately 20 percent from mid-September levels, thanks to an economic downturn that has slowed energy consumption. Crude prices settled at $21.85 per barrel on the New York Mercantile Exchange Tuesday, down 41 cents.

Lube manufacturers said they were especially pleased to see base oil price cuts after watching their costs rise during the past year and a half. Spiking crude costs raised base oil prices across the board during that period. Additionally, many blenders switched from Group I to more expensive Group II stocks to meet requirements for the new GF-3 standard for passenger car motor oils.

Lube manufacturers predicted that they would capture some of the benefits of the base oil price cuts but that a portion of the savings will be passed on to customers to soften the impact of recent increases in finished product prices. One producer said such pass-throughs could help save shaky accounts.

Base oil suppliers, meanwhile, shied from projecting further price movements – whether up or down. Although U.S.-led attacks in Afghanistan appear so far to have had little effect on crude markets, some cautioned that the possibility of disruption in the Middle East cannot be ruled out.

If youre trying to gauge whats going to happen to crude prices, I think they are at pretty normal levels right now, one Gulf Coast marketer said. So you could say that they ought to remain fairly stable unless something unexpected happens. But with the way things are in the world these days, you cant rule out the unexpected.