Several more base oil suppliers joined the round of price hikes begun last week. Sellers and buyers agreed that the market was ripe for its third increase of the year, and some suppliers warned that more markups could come soon.
Valero, Flint Hills, ChevronTexaco and Sunoco moved in line withmarkups reported for five suppliers last week.Allfour companies followed the general pattern set earlier, adding 3 cents to per-gallon postings for light and medium grades, 5 cents to heavies and 7 cents to bright stock.Valeros changes took effect Monday, Flint Hills last Thursday and Sunoco’s last Friday. In addition,Group III supplier SK added raised its postings by 3 cents across the board, effective today.
Paraffinic base oil prices have already undergone three rounds of increases in 2004, after changing just once in the last nine months of 2003.
When crude is hanging between $38 and $40 [per barrel] and supply is as snug as it is and you have the instability that you do in the Middle East, its no surprise that prices have gone up the past week, one supplier said.
Some sources noted that base oil demand will likely rise in coming weeks as motor oil blenders boost production to supply the summer driving season. Some suppliers said base oil operations are also being pushed to keep pace with widening fuels refining margins. They contended that the base oil market remains ripe for further price hikes.
I know [buyers] dont like to hear it, but the same pressure is still there, said one supplier.
The price of crude oil on the New York Mercantile Exchange rose to $40.27 per barrel yesterday, up $1.45 from a week earlier.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.