U.S. Base Oil Price Report

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U.S. base oil market conditions are little changed from a week ago, with most players in agreement that activity is steadily picking up steam in advance of the spring fling, according to sources.

Depending on the market segment, base oil demand can be more robust for some applications than others.

With regard to the key additives makers, volumes are strong and have not shown signs of a slowdown in demand for months. For compounder blenders, business presents more of a challenge. The general slowdown in the automotive sector has negatively impacted consumption of finished lubricants.

On the spot pricing front, there is no real change in spot offers this week, with Group I and II 100/150 viscosity holding around $2.50 to $2.75 per gallon FOB. On a delivered basis, prices are said to be slightly higher than this price band.

A potential buyer can expect to pay around $2.40 to $2.50/gal FOB for cargo-sized shipments, possibly less, depending on volume required. A domestic trade involving only a few tank trucks will likely cost nearer the $2.60 to $2.70/gal level, possibly more, sources said.

Bright stock values appear to be in a firming trend with latest spot quotes up about 5 cents from last week, or around $3.20 to $3.30/gal FOB for export. For domestic trade, bright stock prices are nearing the $3.45 to $3.50/gal FOB level, a few sellers claimed.

Contract-related prices are higher than noted above for both light viscosity neutrals and bright stock, buyers reported.

The naphthenic sector maintained a steady overall supply/demand picture this week, sources said. Prices are holding firm across the board. Transformer oil values are pegged at around $3.25 to $3.35/gal. A moderate slowdown is seen in the transformer oil segment due to the downturn in the U.S. economy, but sources reiterated that it was marginal, and that overall volumes for 40 and 60 viscosity pale oils are still at fairly substantial levels, albeit down from a year ago.

Looking upstream, crude oil values took another run-up this week, zipping over the $94 per barrel mark during intra-day trade. One year ago crude prices were sitting around the $59/bbl level. In a one-year period, crude values have soared an estimated $35/bbl or 83 cents/gal.

As a point of reference, on Feb. 14, 2007, the ExxonMobil Gulf Coast SN 100 posted price stood at $2.82/gal. As of today, the same posting is $2.95/gal, a relatively small gain of 13 cents/gal.

At the close of the Tuesday, Feb. 12 NYMEX session, the front month light sweet crude futures prices ended the day at $92.78 per barrel, a gain of $4.37/bbl over the week earlier close at $88.41.

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.

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