By Tim Sullivan
 
The U.S. base oil market may be experiencing a slow summer, but the global market has seen recent shake-ups in traditional trading patterns. Sources disagree about whether the changes are permanent or are likely to have an impact on the North American market.
 
Marketers in the United States said they’ve observed a number of recent variations in the flow of exports and imports between certain regions. ExxonMobil sent at least one shipment from the U.S. Gulf Coast to Italy, whereas the opposite direction is more common. Supply in Europe, which typically has the world’s largest surplus of base oil, has suddenly tightened due to shutdowns at several refineries.
 
Prolonged turnarounds in the Pacific Rim have tightened supply there and started the region scurrying for barrels to import. Large Indian oil companies, which normally import from the Pacific Rim and Europe, have called U.S. suppliers for price quotes.
 
Some U.S. marketers called the disruptions temporary.
 
“I think it’s mostly the result of these shutdowns in Asia and Europe,” one said. “Things should return to normal once those refineries come back on line.” He and others contended that Indian companies are simply shopping around, and that North American suppliers will end up being too expensive to make sales.
 
Other marketers speculated that it may be getting easier for base oil purchasers to use alternative suppliers, even if traditional trading patterns return.
 
“Maybe the big message is that the world is getting smaller,” one said.
 
Some marketers contended that events in other regions have had little impact on the U.S. market. Others argued that the tightening of European supply has reduced the threat of arbitrage across the Atlantic, thereby increasing the likelihood of price hikes by American suppliers.
 
At least the market has something to chew on as July gives way to August.