Pale oil suppliers agreed that the market was balanced-to-tight and that they had been receiving a steady stream of orders.

On the paraffinic front, requirements for API Group I, II and III base oils remained healthy and suppliers inventories were low to non-existent.

Several producers reported sold-out positions, with some of them trying to catch up on back orders.

A producer said that it was receiving fresh requests for product every week, but that it did not foresee having any extra availability for a while.

We already have our next run on each grade sold before it is even made, the source noted, while another supplier mentioned receiving several spot inquiries, but not being able to supply any spot volumes until the very end of July or August.

A majority of producers were focusing on meeting contract commitments and offering limited spot supply at this time.

Paraffinic producers also mentioned receiving numerous calls from traders looking for product for Europe, India, and Mexico, but most suppliers have not been able to supply spot cargoes for export for a couple of months.

However, one participant said trader interest had dwindled over the last few days, perhaps because the summer holiday season is approaching and product would not be in high demand by the time it makes its way to European ports or other destinations.

Even though a few participants had predicted that the strained conditions would ease by July, there are now expectations that the tightness may persist until September.

The current supply and demand situation is the result of a combination of healthy demand and recent and ongoing plant turnarounds, both in the U.S. and other regions.

Fresh details have emerged regarding the turnaround at one of Motivas base oil trains in Port Arthur, Texas. The unit was heard to have been taken off-line in May – earlier than originally anticipated – and will be shut down for approximately 47 days. The base oil grade that appears to be most affected by the turnaround is the STAR 6 (220 SUS), although this cut can also be produced on the other two trains, according to sources. Motivas base oil plant has capacity to produce 40,300 barrels per day of Group II oils, according to LubesnGreases Guide to Global Base Oil Refining.

There were also rumblings that the Chevron plant in Pascagoula, Miss., would be taken off-stream for a 21-day turnaround in June or July. The unit was down for some time in March/April, according to sources, but might be undergoing a thorough maintenance program and catalyst change in the next couple of months. Contract shipments are not expected to be affected by the turnaround. Chevrons Pascagoula plant can produce 25,000 b/d of Group II base oils.

Producer confirmation about the turnarounds was not forthcoming.

On the naphthenic front, it was heard that the base oil unit at Refineria Isla in Emmastad, Curacao, Netherlands Antilles, had unexpectedly been shut down two weeks ago, following a fire at the refinery. Nynas markets products from the base oil unit, which has capacity of 3,700 b/d of naphthenic oils. Further details were unavailable at the time of writing.

Upstream, crude oil futures staged a rebound to settle higher on Tuesday on expectations that U.S. government data would show a ninth consecutive weekly drop in crude supplies, while concerns over tensions between Qatar and several other Middle East nations eased, with Kuwait acting as mediator.

West Texas Intermediate futures on the CME/Nymex settled at $48.19 per barrel on June 6, down $1.47/bbl from $49.66 per barrel on May 30.

Light Louisiana Sweet wholesale spot prices closed at $49.50 per barrel on June 5, and had settled at $53.06/bbl on May 26, according to data from the U.S. Energy Information Administration.

Brent was trading at $50.12/bbl on the CME on June 6, down $1.72/bbl from $51.84/bbl on May 30.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.