Valero announced price reductions, effective yesterday, of 10 cents per gallon in the 100 through 350 neutral range, and 5 cents in the 500 through bright stock range. Valero also cut the price on its lone Group II base stock by 10 cents.

Citgo announced price decreases effective tomorrow of 10 cents per gallon in the 85 through 325 neutral range, and of 5 cents for 650 neutral and bright stock.

Effective Monday, Sunoco trimmed 10 cents per gallon on 70 through 250 neutrals and 5 cents on 500 neutral and bright stock.

Calumet also said it was cutting prices across the board – including Group II and its lone Group II+ offering – by 10 cents per gallon on vis grades 325 or lighter, and 5 cents per gallon on vis grades above 325. Those changestake effect today.

A source said it seems a simple supply-and-demand issue. We see demand as very weak, the source said. Everyone Ive talked to is pretty much in the same boat, so Im not surprised this is happening. January has been a dismal month for a lot of folks.

The source said the decrease does not seem related to feedstock. The decrease is coming contrary to the recent price change in crude, he said last week. If it were feedstock related, we would have seen this change maybe last week.

Another industry source agreed supply and weak demand are driving the decrease. Our perception is inventories are in fact growing, and base oil demand is very weak at this point, he said.

The source noted that back in August of last year, ExxonMobil raised prices but Group II suppliers didnt follow suit. In late September, Motiva lowered prices and Exxon then reduced prices in October.

Basically what that means is Exxon was one price change behind the market, so Exxon captured the margin for the better part of the last four to five months, he said. I think all it does is really give back the price change that Exxon took in August, where they were ahead of the market, and re-establishes a Group II premium.

Demand at the consumer level appears to be way off, this source said, in Europe as well as the United States. Its obvious the market, especially on light neutrals, is very amply supplied right now, another source said.

The source said last year was very much a supply-demand driven market because of the effects of hurricanes, refinery plant explosions and other things going on. Now there arent any significant operating issues out there other than planned maintenance work, which most people normally will handle and plan inventory moves around, he said. And fuel products and feedstocks are bouncing all over the place. Im not too sure anyone can make too much sense out of whats going on there. The real driver is its purely a supply-driven situation today.

Crude closed at $59 per barrel yesterday on the New York Mercantile Exchange, according to Bloomberg. That was 9 cents below the price a week ago.

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