Base Oil Price Report


During a quiet week for the U.S. base oil market, sellers and buyers watched two fronts – the economy and Americas confrontation with Iraq – for signs of what the near future might hold.

Yesterdays announcement of an agreement to allow United Nations weapons inspectors back into Iraq buoyed hopes for an end to the war premium that has raised crude oil costs. Base oil suppliers have warned for a few weeks now that crude prices in the $30-per-barrel range could force another round of base oil price hikes.

News of the U.N.-Iraq agreement did not immediately relieve that pressure, as crude rose 38 cents on the New York Mercantile Exchange yesterday to close at $30.83 per barrel. Still, sources in the base oil market expressed hopes that the premium might evaporate if inspections actually resume and tensions ease.

I dont know exactly how big the war premium is, one marketer said. But Im sure its there. It would be nice if it wasnt.

There was less cause for encouragement on the economic front. Base oil suppliers have maintained that demand held to normal levels this summer, but they have also expressed disappointment that earlier predictions of an economic recovery did not materialize. Suppliers are hoping that orders pick up soon because the lubricants industry usually enters a winter lull around mid-November.

Demand is by far the most important thing, even more than crude costs, another marketer said. Everybodys been hoping that things would pick up and they really havent. I think now people are watching to see if theres a last push in the next month and a half.

Base oil prices were unchanged this week, perhaps in part because of the annual meeting of the Independent Lubricant Manufacturers Association in Colorado Springs, Col. ExxonMobil typically sets the pace for price adjustments in the market, but observers say the company avoids movements around industry meetings because it does not want to invite allegations of collusion.

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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