U.S. base oil producers this week completed a roundof paraffinic price increases that began last week. Six more suppliers followed a pattern set by ExxonMobil Jan. 27, adding 2 cents per gallon to light and medium grades, 4 cents to heavies and 6 cents to bright stocks.
This was the first complete round of price movements since August, although suppliers of Group II-plus oils lowered their postings in November. Citgo imposed its markups Jan. 28. ChevronTexaco made its effective Sunday, while ConocoPhillips, Calumet, Valero and Sunoco all moved Monday. Motivas increases were reported last week.
Market sources said the increases for light and medium cuts were smaller because domestic demand for those stocks is somewhat weak now. Availability of heavy neutrals and bright stock is more snug, partly because of unusually strong demand for exports.
The price of crude oil on the New York Mercantile Exchange closed yesterday at $34.25 per barrel, up 27 cents from a week ago. Indeed, despite a few spikes, crude prices have hovered around $34 for weeks. Base oil suppliers noted, however, that expenses have risen for inputs such as vacuum gas oil feedstock and natural gas.
Crack spreads have been so strong in the Northeast, and opportunity costs have increased so that base oil margins have really fallen off, one supplier said. This increase allows us to make up part of that.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.