Motiva, seemingly reluctant to join with other producers in pushing down posted prices in October, finally acquiesced by dropping all its Group II and II+ base stocks by 40 cents/gal on Monday, Nov. 3.

On Monday, Flint Hills Resources also initiated a 15 cents/gal drop on its line-up of Group II grades. This was the second round of price decreases issued by FHR in less than a month. The sum of both FHR moves (dropping a total of 35 cents/gal) puts its postings in line with the more recent drops announced by other Group II suppliers.

As posted prices tumbled, spot values were also showing signs of slipping from their summer-time highs for both paraffinic and naphthenic oils. As recent as September, spot numbers were fetching a premium to postings, but have since taken a downward turn.

Sources said the paraffinic side was still fairly firm, but associated spot numbers have eased somewhat and have possibly dipped just below postings. Players added it was fair to presume that some offers for spot material could be discounted as much as 5 percent, depending on grade. Conversely, and depending on the grade required, some spot buyers may still be paying at or near posted prices. Regarding bright stock transactions, suppliers said that buyers were not receiving much of a discount, if any, due to the lack of spot availability.

There was talk this week of Russian paraffinic base oil making its way into the United States. It was understood that at least one sizeable cargo of solvent neutral light vis product has already been sold, and possibly split among a few buyers in the Southeast/Gulf Coast region, at around $4.25 to $4.35/gal delivered. Several additional cargoes are expected to be heading toward the U.S. for delivery during the November-December time frame, but no price details were disclosed.

The naphthenic side of the market was viewed as much more sloppy, and price deterioration was very apparent, according to sources. Several players said that it was difficult to assess pale oil spot values because the buy side and the sell side are as far as 50 to 75 cents/gal apart in some cases. Consumers implied, however, that lower and more attractive prices were becoming easier to obtain almost daily. A few participants indicated average prices for a full range of naphthenic cuts were approaching $3.25 to $3.50/gal FOB, down about $1/gal in just a few weeks. Some grades could fall out of this range in either direction.

Most North American base oil plants are running at top rates just in time for the seasonal slowdown to kick in. Until recently, the market suffered with insufficient availability of various base oils alongside strong demand. However, the supply/demand picture has now changed, just as most anticipated.

A few supply situations could still potentially offset waning demand. The ExxonMobil facility in Beaumont, Texas, continues to struggle with a satisfactory startup after sustaining hurricane-related damage (see front-page story). Petro-Canadas Mississauga, Ontario, plant is understood to be in maintenance mode with an operational restart expected in the second half of November. Motivas Port Arthur, Texas, base oil site is now running at full rates following a disruption stemming from Hurricane Ike. However, Motiva maintains its sales allocation program, recently revised from 50 percent to 80 percent, and is also preparing inventories in advance of a planned 45-day turnaround to commence in mid to late January.

Despite a fire breaking out at Calumets Shreveport, La., plant on Oct 30 (see front-page story), a scheduled maintenance began as planned over the past weekend. The downtime is expected to last for approximately 21 days, with a startup date of Nov. 21.

At the close of the Tuesday, Nov. 4, NYMEX session, front month light sweet crude futures settled at $70.53 per barrel, a gain of $7.80/bbl from the week earlier settlement at $62.73. This is the first gain since Sept. 23.

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.