As far as prices are concerned, the U.S. base oil market continues in a holding pattern this week. Sellers said that contract business is at usual levels – in some cases it is at full throttle, while in other situations, customer orders are more or less flat.
From the sellers point of view, base oil prices are slowly improving across the board, especially for the light viscosity grades. Suppliers are in agreement that bottom-line profits have been and are still suffering. But, they added, as time advances and the market moves toward the spring buying season in late February, prices should firm enough to help enhance otherwise squeezed margins.
In terms of supply/demand, the market is characterized as generally balanced. There remains some length on certain grades, but even this should start to level out as seasonal buying picks up in the coming weeks, according to market players.
Light vis grades, including Group I and II 100/200 neutrals, remain the most readily available. Sources said that sellers of these particular base stocks continue to offer competitive spot prices. However, even though competition prevails, spot prices have firmed a good 10 to 15 cents per gallon since December, sources asserted.
Bright stock spot values have also inched up 10 to 20 cents/gal and are now weighing in around $3.21 to $3.25 per gallon FOB. Contract values are assessed about 20 cents/gal higher on average, after volume discounts or price incentives are taken into consideration. In a few cases, regular business has been concluded at over $3.50/gal FOB, sources said.
Crude oil pricing was little changed at $90 to $91 per barrel this week. Initially, crude rose on speculation that the U.S. Federal Reserve would cut interest rates to spur the economy, boosting fuel demand by the world’s largest energy user. Then values eased on news of possible increases to crude oil inventories. Still, crude futures are holding within a narrow band, and most analysts predict that the $100 per barrel level will not be revisited, at least not in the near term.
At the close of the Tuesday, Jan. 29, NYMEX session, light sweet crude settled at $91.64 per barrel, up $1.79/bbl from the $89.85 settlement reported Jan. 22.
Posted paraffinic prices are unchanged this week.
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.