The only large supplier not to reduce priceswas Citgo. According to a source, the Tulsa, Okla., company decided to maintain current prices, at least until the end of the month. Because ExxonMobil holds by far the largest share of the U.S. base oil market, other large suppliers usually follow its lead when it changes prices.

Thats pretty unusual for one supplier not to go along with a price movement, one marketer observed. Its hard to say why they did that, or how it would affect them. If they use a lot of their base oil in house, as opposed to selling a lot out in the market, why would they follow a price cut? Maybe theyre exporting a lot.

Several marketers said Citgos decision may reflect a sense that momentum for price cuts is waning. U.S. posted prices fell in October and December. During the past year, there have been a total of five price cuts.

Observers say the trend has been largely due to sharp drops in crude oil prices, but crude has stabilized somewhat over the past two months. Crude prices rose 32 cents Tuesday to close at $18.98 per barrel on the New York Mercantile Exchange. Compared against the lowest Gulf Coast posting for Group I stocks, that reflects a gross margin of 65 cents. During the past year, gross margins have generally hung in the range of 65 to 69 cents.

I was surprised to see this last cut, a marketer said Tuesday. I think a lot of people felt like enough of a reduction had occurred already.

Some sources suggested that Citgo may be waiting to see if prices rebound from this last cut.