The U.S. base oils market was described by both the buy and sell camps as steady this week, continuing a trend seen throughout April and into this first full week of May.
Price stability has reigned for the past five to six weeks in the domestic arena and for those contract values linked to postings. The last round of price cuts, which swept through the market in late March and early April, brought discounts of up to 85 cents per gallon for some API Group I and II paraffinic grades.
Spot offers are also recovering from the lows reached earlier this year, traders say, and are now inching higher. Low-ball prices that had been available during the first quarter and early second quarter have since waned, and current offers are firmer, buyers confirmed.
Recent news indicating that the economy is showing signs of improving seems to have injected a breath of fresh air into the base oils market, sources expressed. Every little bit of good news is welcomed, one source said. This could be one reason why overall sales have improved week over week, a seller said.
Federal Reserve Chairman Ben Bernanke told Congress Tuesday that the economy should pull out of a recession and start growing again later this year. But in testimony to Congress’ Joint Economic Committee, Bernanke warned that even after a recovery gets under way, economic activity is likely to be subpar. That means businesses will stay cautious about hiring, driving up the nation’s unemployment rate and causing “further sizable job losses” in the coming months, he said.
The price of oil has been rising and falling with the major stock indexes in recent weeks. Many oil traders view the stock market as a leading economic indicator and a barometer of future energy demand.
However, analysts opinions are mixed regarding the direction crude values are heading. After prices peaked earlier this week just shy of the $55-per-barrel mark, some market watchers suspect that crude values may take a downward course due to waning demand for oil. Other energy experts anticipate an upward trend as the driving season approaches; oil values typically run up heading into the summer months, they say.
At the close of the Tuesday, May 5, NYMEX session, front-month light sweet crude futures ended the day at $53.84 per barrel, a gain of $3.92 compared to the week-ago settlement at $49.92/bbl.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.