The U.S. base oils market is relatively quiet heading into the first full week of October. Overall demand is viewed as being somewhat questionable, with some orders at expected levels for some supply partners, while other consumers are requiring less volume for October, suppliers said.
At this juncture demand should be a little more robust, said one key seller, who suspects that buyers are working off existing inventories before jumping back into the market to replenish stocks. Other suppliers said that customer requirements are at forecasted volumes, and monthly orders should remain steady through year end.
With regard to price movement – there was none, which has offered some relief for both sides of the market. For the first week in many there were no announcements of increases or decreases in either the naphthenic or paraffinic sectors. The lack of up or down price action is indicative of the fairly flat status of the market, said a few participants.
Ergon said that it would not follow other producers in pushing up pale oil prices – at least not in the short term. Ergon is the largest naphthenic producer and the only U.S. pale oil supplier that did not increase prices in recent weeks.
Valeros Three Rivers, Texas, naphthenic facility went down unexpectedly over the weekend, according to Nynas, the marketer for the pale oils produced at this 2,600 barrel per day site. Although details of the stoppage are vague, Nynas anticipates losing about seven days production.
Meanwhile, crude oil price volatility continues to keep base oil producers on their toes. Only recently did analysts indicate crude values would likely run up to $100 per barrel by the end of the year. This week analysts project crude prices could dip back to $70/bbl. The point being that it is very unpredictable, and no one really knows what to expect in the upstream markets, said market watchers.
At the close of the Tuesday NYMEX session, front month light sweet crude futures settled at $80.05 per barrel, a gain of $0.52/bbl from the previous weeks close. During intra-day trade, futures hit a low of $78.90/bbl before staging a late afternoon rally – ending the session at the high. In after-market trade, crude futures continued to gain upward momentum.
Carolyn L. Green, based in Houston, can be reached directly at carolynlgreen@gmail.com.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.