Despite recent drops in crude oil costs, European base oil prices are on the rise – and U.S. suppliers are avoiding downward pricing pressure as a result.
Crude oil costs have fallen steeply since their mid-March peak (above $37 per barrel on the New YorkMercantile Exchange)but sources say base oil prices in Europe have risen since crude headed south. Theysay supply has been constraineddue to maintenance turnarounds at several plants.
Higher European prices mean relief for U.S. suppliers because they dont have to worry about competition from imports. Observers say they therefore expect that American suppliers will continue to enjoy their newly fattened margins. Gross base oil refining margins in the United States had been squeezed by the December-to-March run-up in crude, but have gained nearly 20 cents per gallon since crude peaked.
As long prices in Europe stay up, I dont think youre going to see any price cuts over here, a U.S. purchaser said.
One source added that base oil supply in East Asia has also tightened, so that the supply-demand balance worldwide is exerting upward pressure on prices.
U.S. paraffinic base oil prices were unchanged this week. The price of crude on the New York Mercantile Exchange was up slightly from last week,but fell 5 cents per barrelto close yesterdayat $29.24.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.
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