Base Oil Price Report


Another week passed without price hikes in U.S. base oils, despite upslopingcrude oil costs and mixed signals on imports from South America and Asia.

U.S. base oil buyers and sellers had been predicting markups and expressed surprise last week when ExxonMobil lowered its bright stock postings. Other suppliers followed suit and continued waiting for ExxonMobil, the market leader, to raise prices on other stocks.

So far, it hasnt happened. One marketer bucked the conventional wisdom this week, suggesting ExxonMobil may not raise prices

They may believe that these crude prices are just the result of the problems in Venezuela and the tension over Iraq and that [the high prices] are temporary, the marketer said. They may just be waiting things out.

Others still expect base oil prices to rise.

I think something has to give soon, another marketer said. Given as long as crude has been up, I think well see a [base oil] price increase.

Crude prices on the New York Mercantile Exchange climbed above $34 per barrel the past week, before easing somewhat. The NYMEX price closed at $33.19 per barrel yesterday, up 23 cents, despite a vote by tanker pilots to end their strike against Venezuelas national oil company, Petroleos de Venezuela S.A. The vote fueled hopes of a possible end to the walkout that has hamstrung the worlds fifth-largest oil exporter.

Before that vote, Curacaos Refineria Isla announced it would resume operations with limited feedstock shipments from PdVSA. The refinery, the third-largest source of U.S. base oil imports,is owned by the government of the Netherland Antilles but operated by PdVSA. It stopped producing last month when the strike halted feedstock deliveries.

According to news reports, PdVSA said it was resuming Curacao operations to supply much-needed gasoline to Venezuela, but that base oil and other units would remain idle. An official at Nynas, the Swedish company that handles shipping for the Curacao refinery, said base oil production might resume soon but he did not know when.

The official, Supply Chain Director Per Dahlstedt, also confirmed that Nynas has halted spot sales, which normally account for a significant portion of its naphthenics business. The company has met its contractual obligations but is beginning to find it difficult to do so for some grades.

Dahlstedt said Nynas has weathered the strike thanks in part to production from its refinery in Sweden. That plant normally relies on Venezuelan feedstock but has increased its use of North Sea crude to continue operating.

South Koreas SK Corp. announced that its sales of Group III base oil, including exports to the United States, would not be affected by the national governments tentative plan to curb oil products exports. South Korea, the worlds fourth-largest crude importer, said earlier this month that it would take that and other steps to protect domestic fuel supplies if crude prices rose much higher.

SK issued a statement saying high-value specialty petroleum products would not be affected by an export restriction and that it will continue supplying U.S. customers through its agent, Lithcon Petroleum USA Inc.

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

Copyright 2003 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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