A quiet market scenario continues to be noted in the United States, with activity generally muted ahead of the ICIS World Base Oils conference in London next week.
Suppliers described demand as steady, but not extraordinary, and remained optimistic that requirements would strengthen in preparation for the spring production cycle following the international industry meeting.
While buying appetite from Europe for U.S. exports has been subdued, players said that supply in that region was tightening, and this could result in fresh inquiries for product.
There has also been interest from Mexican buyers, and a number of API Group I shipments from the U.S. – mainly involving bright stock – were heard to have been agreed to, although some Group II material offered at competitive levels has also been transacted.
Domestic supply of Group II oils was expected to tighten in March given that the Chevron plant in Pascagoula, Mississippi, and the Excel Paralubes plant in Westlake, Louisiana, were heard to be scheduled for turnarounds. Product from the Excel Paralubes plant is marketed by Phillips 66 and Flint Hills Resources. No producer confirmation about the shutdown schedule was forthcoming.
Buyers had expected availability from the said producers to tighten ahead of the outages, but so far, there have not been any restrictions noted, sources said.
There has been some tightening of Group III base oils, even though the global market has been weighed down by oversupply conditions in recent months. However, large volumes were heard to be on their way to India – where Group III prices have started to move up – as well as other destinations in Asia.
Rumblings that the Shell Pearl gas-to-liquids plant in Ras Laffan, Qatar, would be undergoing an extended turnaround circulated, but could not be corroborated. The GTL unit can produce 22,000 barrels per day of Group III base oils.
The company communicated in a press release last December that the GTL plant was operating at a reduced rate due to unforeseen maintenance required on some or all of its 18 gasifier units.
Upstream, crude oil futures fell on Tuesday on sluggish demand and an increase in U.S. shale production, which could undermine efforts by OPEC and other producers to reduce the global supply glut. Concerns that U.S. gasoline demand is stalling weighed on futures as well, with U.S. gasoline prices slipping by 1.6 percent on Tuesday.
West Texas Intermediate futures on the CME/Nymex settled at $52.17 per barrel on Feb. 7, down 64 cents per bbl from the Jan. 31 settlement of $52.81 per bbl.
Light Louisiana Sweet wholesale spot prices closed at $54.81 per barrel on Feb. 6, up from $54.13 on Jan. 30, according to data from the U.S. Energy Information Administration.
Brent was trading at $55.05 per bbl on the CME on Feb. 7, down 65 cents per bbl from $55.70 per bbl on Jan. 31.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.