Meanwhile, an improved domestic outlook was again observed this week, largely mirroring activity levels noted in recent weeks, suppliers said. Consumers’ orders are steadily building and should reach producers’ expectations by mid-to-late March and be sustained at scheduled volumes through June, sources said.

Producers say that surplus material has shrunk in recent months as large contract buyers acquired additional volumes in advance of the spring buying season.

Also contributing to a tighter spot supply situation is that some base oil production sites have been operating at reduced rates since late summer, according to some sources. The cut-backs were intended to avoid an overhang of availability amid what appeared to be waning domestic demand stemming from several downstream sectors.

As a result of reduced operating rates and an uptick in domestic buying, spot business has lessened. Traders admitted that it was becoming more difficult to obtain large quantities for late February-early March export opportunities. Traders also said that fresh offers by sellers had firmed up. Group I and II light-viscosity grades were last quoted at circa $2.75 per gallon FOB U.S. Gulf Coast. Heavy-vis product was indicated at $2.85 to $2.90/gal FOB.

Suppliers did not confirm these levels, but players suggested that they would continue to push offers higher as demand builds.

In the meantime, all eyes are keeping a close watch on upstream developments. Crude, natural gas and heating oil values all jumped higher this week.

Crude oil shot to a six-week high on speculation that OPEC will curb production in coming weeks, analysts commented. The Organization of Petroleum Exporting Countries, scheduled to meet on March 5, may cut output as winter heating demand wanes, several oil ministers recently said.

Despite this, natural gas prices advanced to their highest in 15 months on fresh forecasts that colder weather in the Eastern U.S. will spur demand. During NYMEX trade on Tuesday, natgas values peaked over the $9 per million Btu mark, a level not seen since November 2006. Heating oil prices gained about 10 cents/gal from Mondays level to $2.74/gal and unleaded gasoline advanced to $2.60/gal.

At the close of the Tuesday, Feb. 19, NYMEX session, front-month light sweet crude oil futures settled at $100.01 per barrel, a staggering gain of $7.23 compared to $92.78/bbl a week earlier.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.