The U.S. base oil arena maintained its steady course heading into mid-May, continuing a trend that has been in place since early April. Market fundamentals remained balanced, with no recent change to contract prices or supply/demand conditions.
The last posted price adjustments took place in late March to early April, wrapping up a regular series of decreases that had dominated the market since October. During this period, postings fell between $2.60 and $3.15 per gallon, or 45 percent to 66 percent, depending on grade. But now some players are anticipating that price stability could soon meet with interference.
Crude oil values have been steadily gaining momentum the past few weeks, initially moving higher in conjunction with improved stock indexes and signs of an economic recovery.
Energy analysts said this week that despite waning demand for crude oil, there were encouraging signs out of China indicating that its need for oil had grown since last month, particularly in the transport sector.
Whether crude prices can be sustained at their fresh 2009-high levels at over $60 per barrel remains uncertain at this point. But nonetheless, base oil producers are feeling the pinch of steeper raw material costs, sources pointed out.
Participants in both the paraffinic and naphthenic camps said that spot activity was steady, but that suppliers offers have firmed week over week. Increased spot prices are a result of improved demand, less availability of a number of grades, and producers squeezed margins.
At the close of the Tuesday, May 12, NYMEX session, light sweet crude futures settled the day at $58.85 per barrel, up $5.01 compared to the $53.84/bbl close reported one week earlier.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.