Base Oil prices will continue to rally as Crude Oil crossed USD 90/barrel
- 31-Jan-2022 4:31 PM
- Journalist: Jacob Kutchner
Base Oil edges higher in effect of the soaring Crude Oil values in the international markets. The growing imbalance of supply and demand dynamics in Oil market triggered the hike in Crude Oil fundamentals. As Base Oil is a crude oil derivative thus its pricing aspects depends directly upon upstream Crude offers. Moreover, tight supplies of raw materials such as Paraffin for the production of base oil has also led to Base oil scarcity consequently fuming its prices.
Recently, Crude Oil prices have crossed $91/barrel backed by the worsening tension between Russia and Ukraine along with unrest in Middle East. Russia is the world’s second largest oil producer thus, geopolitical turmoil between Russia and West would hugely impact the Oil supplies. Prices have gone from strength to strength on both benchmarks, with Brent Oil and WTI hitting seven-year highs and closing on USD $90.9 per barrel and $87.8/barrel on 28th January.
Underlying fear of acute supply shortage of Crude oil in the near term have stimulated the Base Oil values and will continue to rally in the international markets. In Addition, Base oil market sentiments continue to be bullish as the demand from the downstream lubricants manufacturers is firm that will also going to support the pricing trend of Base Oil.
Base Oil is primarily used in the lubricants formulations where ratio is around 90% base Oil and 10% additives. Other applications of Base Oil include motor oil, metal processing fluids etc. It has been categorized into 5 types by API into different groups based on refining methods and purity such as Group I, Group II, Group III, Group IV and Group V.
According To ChemAnalyst Base Oil prices will attain further gains in the upcoming days as there is no expected relief in the upstream Crude Oil values. Moreover, Crude Oil futures are likely to reach $100/Barrel in March that will consequently transfer the pressure on Base Oil market and its prices.