HOUSTON (ICIS)--The effects of tight supply/demand fundamentals for almost all base oil grades hit the market this week as price increases began to emerge, buyers and sellers said.
Buyers and other base oil participants said ExxonMobil is in the market with increases at 20 cents/gal up on most of its grades, including Group II/II+.
Brightstock is the exception in Group I, with a 15 cents/gal increase.
In Group II+, Kleen Performance Products is raising its prices by 20 cents/gal on all grades.
All increases for both companies are effective 1 May.
Kleen Performance Products confirmed the increase and the date.
ExxonMobil does not confirm or comment on its prices and did not confirm the increases or date.
ICIS-assessed Group I market prices were adjusted up this week on market participant input that higher prices are being conducted in April business.
The Brownsville, Texas brightstock range was also assessed up on buyer and seller verification of bid/offers in the refreshed spread. Higher offers were verified, reaching into the $2.90s/gal and keeping the range under upward pressure. However, Mexican buyers are holding back purchasing to an as-need basis because of the lack of ready material in the region and the higher prices sought.
Group II domestic and export ranges were assessed up, rising strongly on short supply and healthy demand.
In the Group II exports, sources said supply of the 600 grade is tight, with material challenging to secure in export volumes.
Supply/demand are the drivers for the sharp increases seen in the domestic and export ranges, as well as for the emerging increases sought by the two producers in the posted tiers.
While crude oil rose into the $50s/bbl range, market participants said the driving element in the strong base oil market is supply/demand fundamentals.
Three US Gulf coast turnaround situations formed a pivot point in supply, as one large unit was offline for over 40 days, according to some sources. Another is said to be down for maintenance late March and into April and another is scheduled for maintenance in May/June. The combination of these maintenance periods with the seasonal uptick in US demand and the outage at the Shell Qatar facility moved the base oil market out of ample supply and into the tight conditions that now dominate in the second quarter.
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