But this July, the heat is up, raising some participants temperatures to near boiling. Most would agree that fast-rising upstream costs have turned the market upside down at a time when day-to-day business had been fairly steady. Since October, buyers have enjoyed a rash of price decreases, but the tide has turned and market fundamentals are now being challenged.

In early June, a fresh round of posted price hikes swept through the base oil arena – the first series of increases the market had encountered since last July. Chevron was the first API Group II producer out of the chute to announce it would boost posted prices by 20 cents per gallon. Motiva, ConocoPhillips and Flint Hills followed suit, with price hikes from 20 to 40 cents across the board.

The more interesting changes came from the Group I sectors major producer, ExxonMobil, sources said. Although ExxonMobil raised its solvent neutral by 40 cents/gal, the refiner lowered bright stock by 30 cents. Other Group I producers, including Valero, Calumet and Holly (new owner of Sunocos Tulsa refinery), quickly mirrored that move. Increases were applied to the light-viscosity neutrals (the grades most impacted by steeper vacuum gas oil values, a key cost factor), while bright stock postings were trimmed. This change was followed by all Group I producers.

The downward adjustment was intended to bring the posted price more in line with real market values and to narrow ever-widening discounts, suppliers said.

Upstream, crude oil values jumped from below $35 per barrel in March to over $73 in mid-June, on stronger stock indices as well as expectations the global economy is in recovery mode.

Whether or not the summer will heat up more than it already has is unclear. For now, all eyes are on rapidly climbing crude oil values and how they may translate to the base oils market – a market that is faced with ample supply and less-than-normal demand.