With EMEA Base Oils prices not seen at levels this high since 2011, and despite ongoing shortages reported, prices are seen as elevated but stretched at these levels. What we are witnessing some suggest, is primarily a lack of refining feedstocks available to refiners bumping recent price surges. This coupled with knee-jerk reactions to localised lockdowns most recently in India and Europe are factors also. While of little immediate comfort to refiners and blenders alike, WTI crude is now seen as a strong sell and as base oil refiners redress the feedstock issue, prices are expected to stabilise to ease lower.
WTI it is noted has again failed to break above the $65-68/bbl handle pointing to a double-top on a 2 year chart. Trade above $67-68/bbl might have pushed a run above $72-76/bbl handle pointing to sentiment to break higher. With the contract failing, in the near term, a run again to the mid-to-high $50’s in WTI seems more a probability as as global economies struggle to rebalance themselves. While not a direct correlation to the dynamics of the Base Oil market, some observers suggest Base Oils prices although elevated, may have reached a peak near term as the logjam in feedstock availability eases and confidence returns. Clearly, the past few months have demonstrated many blenders are simply unable to pass on their costs to lubricant buyers at these prices.