U.S. Base Oil Price Report

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U.S. base oil fundamentals held firm during the past week, reflecting the scenario that has been apparent since early-to-mid April. Despite rising feedstock costs, postings are unchanged.

Suppliers remarked that customer orders have not wavered from their expected levels during the past month. However, in a few situations, buyers were heard to have recently purchased additional volumes, either one or two rail cars or several truck loads, just enough to beef up their own stock positions.

It was also understood that customers were being much more cautious about placing orders too far in advance, concentrating instead on prompt deliveries for any surplus volumes they may require, according to sellers.

Posted prices have remained unchanged, with the last price adjustments to the downside applied in late March to early April. There has been fresh talk that posted prices could potentially encounter a shift to the upside due to rising feedstock costs on the production end. However, as of this week, no such steps to increase postings have been taken.

Looking upstream, crude oil values have steadily moved to higher ground over the course of the past several months, rebounding off their lows of around $30 per barrel reached in February.

Since the start of May, crude values have moved into the $50 per barrel territory. Within the last two weeks, front-month crude oil futures peaked over the $60/bbl mark during intra-day trade, but failed to settle at this level. After holding steady on either side of $58/bbl last week, crude values dipped back to the $55 to $56 level on Friday, before gaining momentum again this week.

On Monday, crude oil prices rose almost 5 percent to $59/bbl on news of a disruption at a major U.S. gasoline refinery and violence in Nigeria, which renewed supply concerns going into the summer driving season.

The Movement for the Emancipation of the Niger Delta said it had blown up two oil and gas pipelines in Nigeria and would block waterways to disrupt exports, according to Reuters.

Meanwhile, an explosion ripped through the Sunoco oil refinery in Marcus Hook, Pa., sparking a fire in the ethylene unit. The fire was reported to be contained and under control, according to Sunoco spokesman Thomas Golembeski.

At the close of the Tuesday, May 19, NYMEX session, light sweet crude futures ended the day at $59.65 per barrel, up 80 cents/bbl compared to the settlement a week earlier at $58.85.

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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