Base Oil Price Report


This week closes out a tumultuous year for the U.S. base oil market – a year fraught with plant shut downs.

The market will soon see if it can avoid similar disruptions in 2004.

Three plants – ExxonMobils at Baton Rouge, La., the Motiva plant at Port Arthur, Texas, and ChevronTexacos plant at Richmond, Calif. – are scheduled to undergo maintenance turnarounds during the first quarter. Those companies insist that their shutdowns should not affect the market; they say they are increasing inventories ahead of time so as to maintain deliveries while the plants are down.

Some buyers say they take the suppliers at their word and arent concerned. Others say they are nervous, which is not surprising given the markets experience in 2003, when the market suffered through no less than five shutdowns of at least one week. Two of those shutdowns were maintenance turnarounds that appeared to go as scheduled. But two others demonstrated the problems that can develop when things dont go as planned.

ExxonMobil was forced to put customers on allocation for weeks after problems developed coming out of a winter turnaround at its Baytown, Texas, plant. Petro-Canadas Mississauga, Ontario, plant ran at half capacity for nearly three months due to an August explosion that occurred as personnel tried to restart the plant after a power outage.

Problems like those helped pinch supply for much of the year. Some buyers, at least, are waiting to see if things go smoother in the new year.

Base oil posted prices were unchanged this week. The price of crude oil on the New York Mercantile Exchange closed at $32.42 per barrel yesterday, 64 cents higher than a week earlier.

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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