After a relatively long silence on the naphthenic side of the business, prices are moving. Nynas, Ergon, Cross, Calumet and San Joaquin all report increases of 10 to 15 cents per gallon, some effective as early as today.
Nynas is increasing all prices by 10 cents per gallon, effective today. Ergon is raising prices, ranging from 10 to 15 cents per gallon on all grades, effective August 6. Cross is also going up on all grades by 10 cents, effective August 6.
Calumet is increasing all grades by 10 cents per gallon, on a date to be determined in the week of August 13. San Joaquin is raising its prices on all grades by 15 cents per gallon to accounts where price is tied to crude, and by 10 to 15 cents per gallon on all other accounts, depending on various market factors. Virtually all napththenic producers cited crude, infrastructure, transportation and other costs as factors in their decisions.
Following the changes over the past few weeks, the paraffinic market continues in a holding pattern, typical for this time of year. No pricing movements were reported, and outside of a couple of local supply issues the market balance is relatively the same as in prior weeks.
Crude oil continues to climb, and has been bouncing within close range of the historic high. However, some base stock buyers continue to complain that domestic base oil prices and margins are inflated relative to the European and Asia-Pacific markets. In spite of that, refiners are keenly aware of the upside gains in crude futures, and the resulting squeeze on product margins. While there is considerable day-to-day volatility, the trend line is clear. Some European refineries are already beginning to cut runs on fuels production due to poor margins. However, since base stock production continues to pose favorable economics relative to fuels, refiners will be maximizing base stock production in the near term.
While it will likely take some time, ultimately the markets will again gain balance.Meanwhile, those most likely to see the effects of imbalance are domestic finished oil blenders who export to European and Asia-Pacific markets.
Crude closed at $78.21 per barrel yesterday on the New York Mercantile Exchange, according to Bloomberg. That was $4.96 above the price one week ago.
On a personal note, I wish to thank LNG Publishing Co. for bringing me into their group on an interim basis for past couple of months.It has been a great opportunity to touch base with a lot of long-time friends and to make a few new ones as well. – Mark Matson, mdmatson@gte.net
Publishers Note: LNG likewise extends its warmest thanks to Mark Matson, who completes his term as guest base oil editor with this issue. Please look for his byline in future issues of LubesnGreases magazine.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.