The hits just keep on coming as another wave of price hikes swept through the U.S. base oil market during the past week. ExxonMobil stunned the market with yet another fresh increase to the tune of 15 to 25 cents per gallon on its light-end grades, quickly followed by Sunoco, Citgo and Valero, while Flint Hills Resources jumped in with 20 to 25 cents/gal hikes on its API Group II base oils, largely mirroring other Group II moves that had been put into effect in recent weeks.
Flint Hills Resources announced that it pushed up its 70HC, 75HC and 600HC by 25 cents/gal, while 100HC and 230HC grades moved up by 20 cents/gal on May 9.
The more surprising price announcement came from the ExxonMobil camp, as their customers reported that the company had upped its light viscosity grades. On May 9, SN 100 climbed 25 cents/gal and SN 150 jumped by 15 cents/gal. Other Group I producers quickly followed suit and announced similar increases.
Sunoco said that it will raise its SN 70 and SN 100 grades by 25 cents/gal and push up SN 150 by 15 cents/gal today, May 14.
Citgo plans to increase its light end neutrals as well, lifting SN 85 and SN 100 by 25 cents/gal, and SN 150 will go up 15 cents/gal on Thursday, May 15.
Valero will adjust its Group I SN 100 upward by 25 cents/gal and hike its SN 150 by 15 cents/gal on May 15. Valero will also boost its Group II neutral 150 grade by 15 cents/gal in this round of increases.
Calumet said that it would refrain from joining this specific price increase go-round and would rather focus on reviewing the current price structure on a case by case basis. Calumet added thatany assessments would bean effort to bring all direct buyers more in line with prevailing market prices.
Sources said that Marathon removed temporary voluntary allowances (TVAs) on its SN 100 to its customers, effective this week.
In the naphthenic sector, all pale oil prices were booted up between 20 and 30 cents/gal, depending on grade and supplier, in the first week of May. Given the substantial gain in crude oil prices since the last round of price hikes – up about $8 to $10 per barrel amid tight supply positions, producers say they are feeling the pressure to take action again. However, as of this week there were no fresh announcements, but if oil prices are sustained at current levels, producers explained that they would have no alternative but to raise prices in the coming week or two.
Meanwhile, crude oil values continue to trek higher, reaching another record high during intra-day NYMEX trade on Tuesday at $126.98 per barrel,on reports that Iran is planning to cut oil production. Prices eased slightly in afternoon trade, but numbers were still at levels around $126/bbl. The NYMEX heating oil price climbed to a record $3.70 per gallon on signs that refiners are not meeting demand for distillate fuels such as diesel and heating oil. Natural gas prices also climbed to fresh highs over $11.50 per million Btu. Vacuum gasoil barge prices were estimated to be around $3.07 per gallon for high-sulfur VGO and approximately $3.14/gal for low-sulfur early this week.
At the close of the Tuesday, May 13, NYMEX session, light sweet crude front-month futures settled at $125.80 per barrel, a beefy gain of $3.96 over the May 6 close at $121.84.
Carolyn L. Green, based in Houston, can be reached directly at carolynlgreen@gmail.com.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.