With the arrival of summer, not only did temperatures rise, but so did base oil posted prices.
Swarms of increase initiatives surfaced at the end of May and early June, on the back of blistering crude oil and derivatives values and a very tight supply-demand balance.
Base oils sold like hot cakes in the U.S. market, with many suppliers reporting difficulties in keeping up with orders and spot availability described as limited.
Most of the upward price movements echoed Chevrons API Group II price markups of 20 cents per gallon, since the producer was the first one out with an increase, on May 25.
A few days later, ExxonMobil also raised its Group I, II and II+ base oils by 20 cents per gallon, sources said.
Phillips 66, Kleen Performance Products, Motiva, HollyFrontier, Calumet and Paulsboro all went with matching hikes of 20 cents per gallon across the board.
The odd man out on the paraffinic side was Flint Hills Resources, lifting its Group II oils by 22 cents June 9.
In the Group II+/III segment, Phillips 66 tacked two dimes on its base oils, and SK lifted its products by 10 cents.
On the naphthenics side, the market teemed with initiatives from Ergon, Calumet, Cross Oil and San Joaquin Refining, which raised light and mid-viscosity pale oils by 15 cents and heavier cuts by 20 cents in late May.
Much of the supply tightening was caused by verdant demand, a healthy appetite for exports, and planned and unplanned production outages in previous months.
Base oil prices were further set ablaze by crude oil futures, which topped $50 a barrel for the first time in almost 12 months following a drawdown of U.S. crude inventories and concerns over potential supply disruptions in Nigeria.
Some of the base stock increases were transferred down the supply chain. Several independent blenders increased finished lubricant prices, yet steeper raw material values were still heard to be squeezing manufacturers margins.
Whether the uptrend on the base oils side will continue is difficult to predict, but for now, producers are enjoying the balmier environment after a fairly bitter winter of consecutive price reductions.