Base Oil Price Report

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North American lubricant blenders may want to hold onto their seats; the rollercoaster of U.S. base oil prices may soon be going up again.

Base oil prices have been dropping fast – six price cuts since March 2001 – thanks to falling crude oil costs and diminishing demand. But crude has risen again in recent weeks, just as the lubes industry emerges from its winter lull.

Analysts say crude has rebounded because of production cuts implemented by OPEC members and other oil exporters, and because of speculation that the United States may be emerging from a short recession. Prices for West Texas Intermediate, which averaged $19.39 per barrel in December, climbed back above $25 per barrel this month. WTI prices dropped 7 cents to $25.04 per barrel Tuesday, according to Bloomberg.

Base oil suppliers say crude has risen enough that base oil prices may soon follow.

I think most marketers are going to wait and see if this increase in crude prices holds, one marketer said. If it does, [base oil] prices are going to go up because margins just arent acceptable right now.

Increasing demand could help push up base oil prices. Marketers say orders have begun to increase in recent weeks. They add, however, that it is too soon to determine whether the upturn is caused by emergence from the economic slump or simply a normal seasonal trend.

Lubricants production typically falls off in winter, then rises with the approach of the spring and summer driving seasons. Base oil suppliers hope that a reviving economy will lead to a larger-than-normal bump in orders this year.

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

Copyright 2002 LNG Publishing Co., Inc. All rights reserved.
Tim Sullivan, Editor. Lube Report, Lubes’n’Greases Magazine and Lubricants Industry Sourcebook are published by LNG Publishing Co., Inc.

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