The U.S. base oil arena has been fairly quiet following the annual Spring ILMA meeting last week. A lack of spot material helped to keep market activity tempered.
Otherwise, base oils fundamentals held firm this week. Since mid-March, demand appears to continue to build weekly. Posted prices are holding steady following a recent full round of increases.
Ahead of the price hikes that began in March and wrapped up in mid-April, producers had been coping with deflating operating margins because of rising feedstock costs. As demand picked up, albeit slowly according to some suppliers, and inventories began to shrink, producers gained confidence to increase naphthenic and paraffinic prices.
Meanwhile, customers agree that they are receiving much of their contractual needs, but continue to have trouble sourcing extra volumes, depending on grade. Even though most regular requirements are being shipped on time, some orders are being delayed – again depending on grade and supplier.
According to direct customers, Flint Hills Resources’ planned turnaround that commenced in March, was completed in recent weeks. Sources believe, however, that the major is still returning to normal operations and attempting to replenish stocks. It was noted that FHR customer orders were filled regularly while the downtime was underway.
Cross Oil’s scheduled turnaround that began at the end March is ongoing, with production expected back on stream around May 10. The company has no surplus volumes to offer into the spot arena.
There are a few planned downtimes on tap during the summer and into the early fall although details are vague at present.
At the close of the Tuesday, April 24, CME/Nymex session, front month light sweet crude oil futures ended the day at $103.55 per barrel, down 65 cents/bbl from last week’s settlement at $104.20.
Brent crude was trading at $118.13/bbl at the end of the day yesterday, slipping 63 cents/bbl from its week-ago level at $118.75. LLS (Light Louisiana Sweet) crude was trading at a premium of about $17/bbl to WTI on Tuesday.