This weeks U.S. base oil activity fell quiet, resuming the more traditional behavior found during the latter part of summer and particularly mid-to-late August.;
A week earlier, however, the market was stirred with news from all naphthenic producers outlining their plans to raise prices by 20 cents to 25 cents per gallon, depending on grade and account. Steeper prices are expected to take effect later this week.
Naphthenic producers gained support to boost prices from the higher crude values which regularly ascended over the previous four to five weeks. Naphthenic producers last sought upward price adjustments in early-to-mid June.
In some cases, suppliers reported an uptick in demand for certain pale oil grades. One producer said his accounts would all be brought up to a minimum level of $2.15 to $2.20 per gallon, and any TVAs (temporary voluntary adjustments) that might be in place would also be removed.
During the previous weeks price announcements, Flint Hills was the only paraffinic producer to move, issuing a price increase of 10 cents to 15 cents/gal. Some sources suspected that the FHR move was intended to bring its postings more in line with other Group II prices. No other paraffinic adjustments have been heard this week.
All in all, sources contend that it is fairly quiet in the United States because Europe is largely closed down until late August, while participants on that side of the pond enjoy summer holidays. As well, many small European lubricant blending and packaging facilities are shut down for routine maintenance during this time.
Despite a fairly lackluster August in the United States, a few suppliers reiterated that July sales were above average, and this months volumes were expected to be thin.
Meanwhile, a few traders continue to seek heavy paraffinic grades for potential offshore opportunities, but finding large slugs of neutrals 500 through 700 or even bright stock remains difficult. Conversely, sources strongly suggest that light-vis neutrals are plentiful.
In upstream news, crude has been hovering at the $70 to $71 per barrel mark for just over a week, and energy experts are now searching for clues to whether this level can be sustained. The outlook for the global economy remains a mystery to most, and there are some doubts that a recovery is under way.
Still, some analysts believe that $75/bbl may be tested soon, but will not likely hold. They suspect oil values then could take a downward turn, due to poorer-than-expected summer driving.
At the close of the Tuesday, Aug. 11, NYMEX session, light sweet crude futures ended at $69.45 per barrel, a loss of $1.97 compared to the week-earlier settlement at $71.42.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.