After some months of reliable supply and stabilizing prices, and after first quarter price reductions, knowing insiders report that some blenders have begun building stocks over the past 30 days. Responding to recent memories of supply disruptions in 2005 and 2006, they are anticipating the coming agricultural, construction and driving seasons by ensuring adequate inventories of key grades like 100, 150 and 300 neutrals.
While overall lube unit utilization ratesseemed low when the year began (with just about 80 percent utilization in January, according to the latest data available from the Dept. of Energy),sources at major producer/pace-setter facilities say they are running much closer to rated capacity (95 percent) on key grades.
Some suppliers and spot customers report difficulty meeting all delivery expectations. The recent up-tick in crude and fuel products prices could be accelerating this trend.
While some distributors have reported taking advantage of current prices by building finished products inventories, others are on the sidelines waiting for announcements of increases before taking that step.
Overall, the base stock market appears balanced, with sources saying that any movement may have to wait for an anticipated upsurge in demand or a further change in crude prices to set future direction.
Posted paraffinic base oil prices are unchanged in the United States this week. Crude closed at $64.40 per barrel yesterday on the New York Mercantile Exchange, according to Bloomberg. That was 18 cents below the price a week ago.
Publishers note: Guest contributor Donna M. Couch, retired from ExxonMobil, spent 25 years of her career with Humble, Exxon and ExxonMobil in lubricants, greases, solvents, wax, white oils and process oils.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.