However, looking at more recent market activity, a majority of U.S. suppliers said that requirements had been steady to healthy in June, particularly for the heavy vis grades. This had helped support stable pricing in that segment, with no price initiatives noted during the week.

A few of the lighter cuts show more plentiful availability, resulting in slightly larger spot discounts for these grades. Sources said that within the Group II, some players seemed to be discounting 40 cents/gal off postings.

However, both paraffinic and naphthenic suppliers agreed that there was generally no need to offer large incentives as demand had been satisfactory.

At the same time, sources mentioned that two suppliers that had shown some length on Group II 100N were now balanced-to-tight since they had shipped fairly large parcels to India when the arbitrage was open.

Sources also heard that the Pemex refinery in Salamanca, Mexico, would be starting a thirty-day turnaround this week, which will likely call for more U.S. product to cover for the shortfall in production. The Group I plant in Salamanca produces 6,000 barrels per day.

On the naphthenic front, suppliers continued to report balanced supply/demand factors and consistent order patterns, with requirements from the transformer oil segment said to be robust. Suppliers reiterated that there was no pressure to change current pricing, so much so that naphthenic postings have not seen any revisions since November of last year. Nevertheless, at least a couple of suppliers acknowledged that there had been a small uptick in some spot pricing as a number of lighter cuts remained on the tight side.

July may be a different story in terms of demand, a couple of suppliers conceded, as the month typically brings about more pronounced symptoms of the summer doldrums, with participants already noticing some signs of a slowdown in June. The 4th of July holiday and the start of the summer vacations were anticipated to result in reduced product movements during the next couple of weeks as well.

As far as production is concerned, base oil plants were heard to be running at normal rates. Chevron was heard to be building inventories after the restart of its Richmond, Calif., refinery. It was heard that the producers South Korean joint venture partner had supported the supplier with product shipments during the extended shutdown, which had been caused by a fire in August 2012.

In production news, Neste Oil announced that it would be adding Nexbase 3030, a light viscosity grade, to the line-up of base stocks available to its U.S. customers. With the addition of Nexbase 3030, which will be stored at the companys terminal in the Port of Houston, Neste Oil will be able to offer from 3cSt to 8cSt grades.

Nexbase 3030 is an isoalkane cut, isolated from the light end of the Nexbase Group III base oil production process, and is both aromatics- and sulfur-free. Classified as a process oil and with a high flash point, the product can be used in applications ranging from metal-working fluids and transformer oils to highly demanding driveline fluids, the supplier said.

Upstream, WTI (West Texas Intermediate) crude rose to the highest level this year on concerns about civil unrest in Egypt and expectations that U.S. government data would show that stockpiles dropped significantly last week. Demand for gasoline grew 0.6 percent in the week ended June 21. Motor fuel demand typically peaks from the last weekend in May to the Labor Day weekend in early September because of the summer driving season.

WTI crude settled on the CME/Nymex on Tuesday, July 2, at $99.60 per barrel, up $4.28/bbl from last weeks settlement at $95.32/bbl.

Brent for August delivery settled at $104/bbl on the London-based ICE Futures Europe exchange, up $2.74/bbl from $101.26/bbl a week ago.

LLS (Light Louisiana Sweet) crude was trading at a premium of $6.70/bbl to WTI on July 2, the lowest premium seen in more than 29 months.

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