Limited availability of most base oil cuts against steady demand have resulted in steeper spot numbers in the United States, while posted prices remained stable this week.
Avid buying appetite over the last few months – both in the domestic arena as well as on the export front – together with a busy plant turnaround schedule have led to the tight supply of most grades, with the heavy-viscosity cuts and bright stock in the Group I tier heard to be difficult to source for spot transactions.
Spot indications have consequently moved up, with a Group I supplier heard to have increased the heavy-viscosity grades and bright stock by 15 cents per gallon and the lighter grades by 5 cents/gal from a week ago, although the seller was heard to have minimal stocks.
A U.S. refiner has also raised prices to its distributor in Mexico, where there is strong buying interest for Group I oils. Mexican customers are calling every day, a seller remarked. However, given that availability of U.S. spot material is almost non-existent, Mexican consumers imported product from Petrobras in recent weeks, but it was heard that the Brazilian producer was sold out of spot volumes.
The snug availability of Group I cuts was particularly felt in Europe, where plant rationalizations in recent years have significantly affected supply conditions, and there were no extra cargoes offered out of that region either, sources noted.
Firm crude oil values offered additional support to current base oil indications, with futures edging up early in the week on expectations that OPEC members would extend the production cuts that are due to expire mid-year at a meeting scheduled on Thursday.
West Texas Intermediate futures on the CME/Nymex settled at $51.47 per barrel on May 23, up $2.81/bbl from $48.66 per barrel on May 16.
Light Louisiana Sweet wholesale spot prices closed at $53.06 per barrel on May 22, and had settled at $50.96/bbl a week earlier, according to data from the U.S. Energy Information Administration.
Brent was trading at $54.15/bbl on the CME on May 23, up $2.50/bbl from $51.65/bbl on May 16.
In other market news, Abu Dhabi National Oil Company signed an agreement making Penthol exclusive seller of Adnocs Group III base oil in the U.S. Since the summer of last year Penthol has been importing product from Adnocs plant in Ruwais, United Arab Emirates, and cooperating with Vertex Energy on sales, marketing and logistics. The contract announced last week locks in that arrangement.
Penthols U.S. subsidiary, Penthol LLC, offers 4, 6 and 8 centiStoke Group III base oils from its storage tanks in the U.S. Gulf Coast and from a Houston, Texas, terminal.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.