In a late-breaking announcement, Valero revealed its plans to raise several posted prices between 15 and 25 cents per gallon. Otherwise, U.S. base oil activity was on auto-pilot this week with little activity in advance of the Independence Day holiday.
Valero said that it will increase posted prices for its API Group I solvent neutral as follows: SN 165 will add 15 cents/gal, and SN 500 and SN 700 add 25 cents/gal. Valero said that a number of other intermediate blends between 165 vis and 500 vis will go up 20 cents/gal, with all hikes effective Friday July 3. Postings on Valeros 100 vis and bright stock are unchanged.
On June 12, Valero increased its SN 100 by 40 cents/gal and lowered the bright stock posting by 30 cents/gal, largely mirroring a spate of changes producers pushed through in early to mid June. This most recent Valero move may represent a fresh round of price movements to unfold in coming weeks.
With the exception of the Motiva move (the company raised its Star 5+ by 15 cents per gallon on June 12), no other postings in the Group II+/III/III+ categories have been modified recently. The last posted price changes on these higher-quality base stocks took place in late March, when postings were dropped by 55 cents/gal by both SK and ConocoPhillips.
Despite a quiet week, most base oil suppliers continue to pay careful attention to upstream developments. Although crude values traded in a fairly narrow range of $68 per barrel to $72/bbl during June, some energy experts anticipate oil may gain upward momentum and head for $80/bbl in coming months.
Even though producers raised most base oil prices in June, they still contend that margins continue to suffer, even with crude values currently hovering around $70/bbl.
In steps to improve deflated profits, starting in April producers began eliminating temporary voluntary allowances (TVAs). They also attempted to lessen the steep discounts that had been widely available throughout the first quarter for many grades of base stocks – and in many cases they succeeded. Producers then followed up with a round of price hikes in June, the first upward adjustments the market had endured since last July.
These various measures were implemented shortly after crude values began to trek higher, rebounding from this years low around the mid $30s/bbl, reached in late February to early March.
At the close of the Tuesday, June 30, NYMEX session, front-month light sweet crude futures ended the day at $69.89 per barrel, a modest gain of 65 cents compared to the June 23 close at $69.24/bbl.
Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.