Posted prices in the U.S. base oil market were unchanged again this week, and observers said they see little to suggest they will move any time soon.
Sellers and buyers noted that costs have dropped in recent weeks. The price of crude on the New York Mercantile Exchange closed yesterday at $59.80 per barrel, according to Bloomberg. That was $2.43 lower than a week earlier and down from a record $70.85 set Aug. 30.
Fuel prices have also retreated since spiking immediately after Hurricane Katrina, easing costs for vacuum gas oil, the feedstock used to make both fuels and base oils.
Observers said the market appears to have coped with temporary plant shutdowns caused by Hurricane Rita (see article above) and that demand does not seem especially tight.
There isnt any upward pricing pressure today because there dont appear to be any supply issues, one marketer said. Given the decline in VGO prices, you could even say there is pressure for price cuts. But I dont think thats likely. I think suppliers might want to give the market – base oils and fuels – a little more time to settle down.
Aside from the implications for margins, observers said base oil sellers are reluctant to lower prices for fear that new disruptions could send costs spiraling upward again.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.