U.S. Base Oil Price Report


Reports about market activity were mixed, with a number of suppliers stating that demand was stronger than expected for November – even with the approach of the year-end holidays – while others mentioned signs of a slowdown in certain segments. Product availability has improved as most plants were running well and at least one unit resumed production following a minor maintenance shutdown.

Ergon announced that the scheduled fall maintenance program at its naphthenic refinery in Vicksburg, Mississippi, has been successfully completed. The planned event began Oct. 23, and downtime for operating units was varied as reliability improvements were made to further support secure supply of products to customers, the company explained.

Get alerts when new Sustainability Blog articles are available.


“All units are up and running as planned, and there were no supply interruptions for our customers,” stated Lance Puckett, president of Ergon Refining Inc. “Prior to the maintenance period, product inventory levels were increased in order to support sales.” The plant’s capacity is 22,000 barrels per day of naphthenic base oils, according to Lubes’n’Greases Base Stock Plant Data.

Also within the naphthenic segment, Calumet’s plant in Princeton, Louisiana, started a planned turnaround earlier this month. The company said that the maintenance program was completed as scheduled and the unit was restarted on Nov. 16. Contractual requirements were covered during the shutdown. The Princeton plant can produce 6,900 barrels per day of naphthenic base oils.

The naphthenic sector remained fairly snug due to recent and ongoing turnarounds and steady demand, although requirements for exports to Latin America have declined over the last two weeks.

Cross Oil completed a brief shutdown and a catalyst change at its 5,000 b/d naphthenic base oil plant in Smackover, Arkansas, back in September. Further ahead, San Joaquin Refining has slated a three-week maintenance shutdown at its plant in Bakersfield, California, starting on Feb. 1. The plant can produce 8,100 b/d of naphthenic base oils.

Cross Oil and Calumet announced price increases of 20 cents per gallon on all naphthenic base oil grades, effective Nov. 4 and Nov. 3, respectively. The initiatives were driven by mounting crude oil, natural gas and other raw material prices, along with steeper costs in labor and freight. There had been some resistance to the higher values because not all suppliers had raised their prices at the same time, but all the producers continued to evaluate market conditions as they have fluctuated over the last few weeks.

On the paraffinic side of the base oils business, postings were stable and no additional increase initiatives surfaced following Chevron’s posted price increases of 12, 15 and 20 cents/gallon, due to be implemented on Oct. 19.

Some corners of the market were still fairly tight, whereas supply of a few API Group I and II grades has lengthened, prompting downward spot price adjustments. Bright stock has seen the most dramatic decline compared to other grades. Producers were offering lower values to entice purchases ahead of Dec. 31 in order to lower inventories and avoid tax repercussions.

Within the Group I and II categories, the light grades appeared to be more plentiful, while the heavier cuts were more difficult to locate. A couple of suppliers continued to explore the possibility of exporting light-viscosity cargoes to Mexico, South America and India, but the numbers did not always work, because prices in other regions have come under pressure as well. U.S.-origin Group II cargoes in particular were being offered to India and the Middle East.

A few U.S. suppliers have also tried to increase volumes sold to domestic contract customers, but at prices closer to current spot levels. At the same time, it was heard that South Korean suppliers were in discussions to move Group II heavy-viscosity base oil cargoes to the U.S. given advantageous pricing, while European Group I parcels were moving from Europe to Mexico and South America, competing with U.S. offers.

In the Group III category, the 4 centiStoke was described as extremely tight, supporting current price indications. Demand from the automotive segment for the 4 cSt grade was reported as healthy, despite recent manufacturing disruptions at lubricant blending plants due to raw material shortages (additives in particular) and other issues. The 6cSt and the 8 cSt were more abundant, with prices coming under pressure as a result, in particular for the 8 cSt cut.

Group III market participants expected the 4 cSt grade to be in short supply well into 2022, given that producers were running at full rates and supply was still not deemed sufficient to meet growing demand in the United States and other regions. A distributor of Middle East Group III supplies noted that it was shipping the maximum amount of product available from the plant on a monthly basis and it was still not enough to cover all requirements.

In downstream finished products segments, several major and independent manufacturers have communicated price increases of up to 15% for lubricants, greases, coolants and other finished products, with effective dates peppered between Dec. 1 and Dec. 15. Suppliers said the increases were necessary to offset mounting production costs, including the price of base oils, additives, transportation, labor and packaging, among other factors.

At least two additive producers had previously announced price increases of 8-9% for first half of November implementation, according to sources. Additive availability was still tight, with one major supplier’s facilities undergoing a turnaround until the second half of November.

Upstream, crude oil futures slipped on Tuesday, prolonging a downward trend which started the previous week, as COVID-19 infections have surged in Europe, fueling concerns that new lockdowns would be implemented and crude oil demand would be curtailed as a result. There was also speculation that the U.S. would release crude reserves to stop a rally in gasoline prices.

The International Energy Agency predicted a softening of oil prices as output was expected to increase. The recent spikes in demand were partly attributed to shortages of natural gas and coal, which had triggered a switch to crude oil.

On Nov. 16, West Texas Intermediate December futures settled at $80.76/barrel, compared to $84.15/barrel on Nov. 9.

Brent futures for January delivery settled at $82.43/barrel on the CME on Nov. 16, down from $84.78/bbl on Nov. 9.

Light Louisiana Sweet crude wholesale spot prices were hovering at $81.00/barrel on Nov. 15 and had settled at $82.06/bbl on Nov. 8, according to the Energy Information Administration.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.

Lubes’n’Greases Publications shall not be liable for commercial decisions based on the contents of this report.

Archived base oil price reports can be found through this link: https://www.lubesngreases.com/category/base-stocks/other/base-oil-pricing-report/

Historic and current base oil pricing data are available for purchase in Excel format.

Related Topics

Base Oil Pricing Report    Base Stocks    Market Topics    Other