“In January, crude oil prices fell to levels not seen since April 2009. Spot Brent crude hit a low of $45/Bbl in mid-January, but has since rebounded to around the $60 mark. As expected, commodity products followed suit. As evidenced by the currently high level of profitability shown in this month’s index, base oil prices have yet to fully correct themselves against crude oil prices,” noted Ian Moncrieff, Vice President of Kline’s Energy Practice. “Due to the dramatic and significant price collapse in commodity markets, base oil producers have benefitted from the inherent lag in posting adjustments. As noted in last month’s Margin Index release, lagged margins are significantly lower than instantaneous margins. We expect this anomaly to be progressively corrected as oil markets stabilize, and recover towards a new norm.”
For more information on the Kline Index, or to inquire about our pricing and margin analysis services to the base stocks industry, please contact Ian Moncrieff, Vice President (Ian.Moncrieff@klinegroup.com) at (973)-615-3680 in Kline’s Energy Consulting Practice.