Apart from SK joining in on the recent round of price moves in the API Group II+/III sectors, it was a fairly quiet week in the U.S. base oils arena. Sources were most likely taking a breath while assessing the recent price decreases for Group II/II+/III postings, which were initially put into play several weeks ago by Motiva.
SK moved its Yubase oils postings a week ago on Wednesday, Jan. 23. The company said it had taken off 30 cents/gal from its Group II+ 3 cSt. For the Group III grades, SK knocked off 25 cents/gal from the 4 and 6 cSt oils and chopped 15 cents/gal from the 8 cSt.
So far this year, there have been no attempts from the Group I segment or the naphthenic side of the market to follow by lowering posted prices. Solvent neutrals and pale oil prices were last adjusted in November.
Sources indicated that with lower posted prices alongside rising demand, it would not be far-fetched if base oils producers were to push for higher prices in the coming month or so.
One of the main reasons for this suspicion that postings could firm is that upstream costs have been on the rise for a few weeks. Furthermore, energy analysts believe that crude oil values will continue to trend higher this year.
Meanwhile, suppliers have said that customer orders continue to improve weekly. This has brought a sense of relief to producers that inventory positions will stay well balanced as long as buyers off-take increases in coming months.
The Ergon Vicksburg, Miss., refinery plans to enter into a planned 29-day maintenance turnaround later this week. The facility has a 22,000 barrels per day capacity for naphthenic base stocks. The company said that it did not expect any delays in customer shipments during the scheduled downtime and that all orders should be filled.
Another positive report regarding home sales appears to have injected a dose of confidence into the base oils market that the U.S. economic front continues to improve. Home sales rose steadily during 2012, and it was the strongest year since August 2006.
At the close of the Tuesday, Jan. 29, CME/Nymex session, front month light sweet crude oil futures ended the day at $97.57 per barrel, gaining $1.33/bbl from last weeks settlement at $96.24. Brent Crude was trading at $114.16/bbl at the end of the day yesterday, up $1.92 /bbl from its week-ago level of $112.24. LLS (Light Louisiana Sweet) crude was trading at a premium of $17.45/bbl to WTI on Tuesday.
On a side note, WTI values are up ten percent so far this year, while Brent crude prices have gained about 2 percent since the start of 2013.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.