Motiva and Citgo said they had not yet decided what action to take, although observers predicted they would implement increases of some amount next week. Sources said ChevronTexaco had not announced any changes as of yesterday.

Some purchasers called the hikes unexpected, saying base oil margins had already been hovering around average levelsof the past 10 to 15 years. They noted that turnarounds at European base oil refineries – some planned, some not – have caused supply there to tighten. A few months ago, the region had heavy surpluses, and the threat of exports to the United States was helping to hold down prices in the latter market.

I think this was margin management, one purchaser said. They did it because they could. Supply is tight in Europe, at least for the moment, and supply is tight in Asia.

Suppliers, some focusing on recent history, said they were not surprised by the price increases.

The price of crude oil is about where it was at this time last year, a marketer said. But 100 neutral was about 20 cents less [before this weeks increases]. With demand at normal levels, it only made sense that base oil should go up.

If crude stays where it is right now, I wouldnt be surprised to see base oil go up again next month.

Sources said they believed ExxonMobil left its bright stock posting unchanged out of consideration for its own supply-demand balance – they said the company has increased its own production – not because of market conditions. Still, other suppliers were unwilling to raise their own bright stock postings in advance of the markets dominant player.

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