Naphthenic prices have fallen since last fall, but not nearly so much as prices for paraffinics, which account fornearly 80 percent of U.S. base oil capacity. Driven by falling crude oil prices and declining demand, the paraffinic market has undergone four price cuts since mid-October.

The naphthenic market is subject to the same effects from the economy and crude pricing, but some naphthenic suppliers managed to lower prices just once during the same period.

Some suppliers attribute the steadiness of naphthenic prices to the closing of Golden Bear Oil Specialties refinery in Oildale, Calif., and disruptions in naphthenic production at the former Pennzoil-Quaker State refinery in Shreveport, La.

A joint venture between Ergon and San Joaquin Refining purchased the Oildale plant last July after Golden Bear went bankrupt, but the buyers have not resumed operation of its 5,300-barrel-per-day refinery.

Calumet Lubricants Co. bought the Shreveport refinery last year but have been delayed in starting up the naphthenic plant, which has capacity of 3,000 b/d. At the beginning of 2002,U.S. naphthenicrefiners had total capacity of 45,300 b/d.

Demand [for naphthenics] has been down because of the economy but were looking at about 15 percent of supply thats been taken out of the market, one marketer said. Thats why our prices have held.

Other marketers noted that the naphthenic market does not suffer the same winter lull as the paraffinic side because a large portion of naphthenics are sold as process oils.

Calumet expects to resume naphthenic production in Shreveport this month. Naphthenic marketers hope a reviving economy will absorb the extra supply and keep their prices buoyed.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.