Valero received no company the past week on its June 1 hike of bright stock prices. Some observers took that as a sign that other bright stock suppliers have decided to stand pat.
Valero raised its posted price for bright stock 5 cents per gallon last week, citing tightness in the market and high alternative values for making fuels. No one seems to question that supply for bright stock is exceptionally tight, or that competing margins for fuels are exceptionally attractive.
Still, the week passed without word of markups by any of the markets other bright stock producers – ExxonMobil, Citgo, Sunoco or Calumet. ExxonMobil seemed the key to the logjam, as other suppliers usually defer to its lead on price movements. Several observers suggested that ExxonMobil would have announced a change by now if it was inclined to do so.
Although it is relatively rare for a base oil supplier to raise prices without company, market sources predicted current conditions will give Valero cover to hold onto its nickel.
Bright stock is tight enough that I dont see Valero rolling back, one buyer said. But I think what happens with the rest of the market – with bright stock as well as other grades – depends more on crude and feedstock costs.
While crude oil costs had fallen considerably since reaching record levels in March, prices for vacuum gas oil – the feedstock for making fuels and base oils – had remained high.
Crude climbed again in recent days, closing yesterday at $53.61 per barrel on the New York Mercantile Exchange. That was $1.48 higher than a week ago.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.