US naphthenic base oil margins were mixed from the middle of December to early February, with the week-on-week decline slowing since mid-December. Margins were mixed from higher naphthenic base oil spot prices and stronger costs of crude and feedstock.
The Argus spot domestic US pale oil 60 premium to four-week average WTI crude fell to $53.45/bl, down by $0.20/bl on the week.
The decline is the first drop of less than $2/bl week-on-week in the last six weeks. The premium has fallen by $12.45/bl or 20pc, since its recent high of $69.48/bl for the week ended 17 December.
The Argus spot domestic US pale oil 60 premium to four-week average Louisiana Light Sweet crude fell to $53.18/bl, down by $0.19/bl from the previous week. The premium has fallen by $14.57/bl or 22pc, since the week ended 10 December.
But the Argus spot domestic US pale oil 60 premium to four-week average Brent crude rose to $53.45/bl, up by $0.14/bl on the week, the first increase since the week ended 17 December.
Naphthenic base oil spot prices rose to during December-February because of tighter supply in the US. One refinery began a turnaround at the end of January. Another two refineries have planned maintenance in February and March 2022 and are working to build inventories ahead of the maintenance. That has curbed spot availability for all grades.
Naphthenic base oil margins had been declining since December on weaker demand. Several blenders and refiners cleared inventories during the end of 2021 to avoid year-end tax assessments.
US naphthenic base oils have also faced stronger competition from lower-priced paraffinic base oils. Some blenders can switch between base oils for their applications.
