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Base Oil Report

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The past few months have been perplexing and challenging for the U.S. base oil industry, to say the least. Participants have had to deal with unpredictable factors – such as fluctuating crude oil values and swelling waves of supply struggling to come to shore – all against a backdrop of uncertainties in downstream lubricants segments.
But most base oil insiders are used to the ebb and flow that characterizes the market, and many were waiting to catch the tide, confident that conditions would eventually improve.
Indeed, with the arrival of spring, the tide appeared to turn, and prospects became more positive. Increased requirements for most base oil grades – both on the domestic and export fronts – started to come in, and this, together with higher crude oil values, allowed producers to move prices up.
After a surge of price hikes from the majority of paraffinic suppliers during March, early April brought a splash of naphthenic activity, with Ergon Refining being the first producer to announce a pale oil price increase in several months.
Ergon lifted pricing of its naphthenic oils by 15 to 20 cents per gallon, effective April 6. The amount of the increase was based on viscosity, with the lighter grades (up to 750 Saybolt Universal Seconds) going up by 15 cents, and the heavier cuts moving up by 20 cents per gallon, according to sources.
Along similar lines, Cross Oil and Calumet raised prices on April 11 and April 19, respectively. The producers lighter grades up to 750 SUS advanced 15 cents per gallon, while the heavier cuts increased 20 cents.
Even while welcoming the opportunity to improve prices, some players said they were rather hesitant about participating in these rounds of increases, because they did not want to lift values and then have to lower them again if crude oil numbers suddenly sank.
Just like a life guard perched in his cabin carefully watching swimmers frolicking in the waves, base oil suppliers have to keep a close eye on ever-changing fundamentals and be ready to jump at the slightest change in the tide.

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