U.S. Base Oil Price Report


Additional base oil producers joined those suppliers that had announced posted price increases last week by stepping out with initiatives of their own. The price revisions pushed prices up by 15, 20, 25 and 30 cents per gallon, depending on the product and the seller, on the back of mounting production costs, snug supply and tightening feedstock availability.

Some of the factors affecting pricing were not directly related to the base oil market per se, but they impacted oil and natural gas imports and feedstock availability. One of them was the ongoing Russian war on Ukraine that has prompted a United States ban on imports of Russian crude oil and other refined products, and this was anticipated to result in reduced availability of vacuum gas oil, which Russia exports in large quantities.

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Furthermore, given steep fuel prices in the U.S., some refiners favored the streaming of feedstocks into the production of fuels such as jet kerosene and diesel and have lowered output of API Group I and Group II base oils in the process. Spot availability was therefore heard to be very limited. Some cargoes continued to be offered to Mexico, but transactions were difficult to conclude due to the price gap between buyers’ and sellers’ expectations.

On the bright side, most refineries were running at close to full rates, but it remained to be seen whether this situation would be affected by reduced supplies of VGO.

Another factor that may impact the base oils market in coming weeks was the need to start padding inventories ahead of the hurricane season in the Atlantic basin, which runs from June 1 until November 30 and meteorologists predicted to be a very active one again this year.

The strained market conditions prompted several base oil producers to initiate posted price increases over the last three weeks. Among the latest producers to announce increases was HollyFrontier, which communicated a 20 cents/gal posted price increase on all API Group I base oils, effective April 25.

Along similar lines, Petro-Canada lifted its Group II prices by 30 cents/gal and its Group II+ prices by 20 cents/gal as of April 25. The producer’s Group III postings remained unchanged.

On the rerefining side, Safety-Kleen increased posted base oil prices by 20 cents/gal on the company’s Group II+ 120 and 240 viscosity grades, effective April 20.

Avista Oil Group announced an increase of 20 cents/gal on its Group II+ base oil, which went into effect on April 25. “The increase is due to changing fundamentals including unprecedented cost inflation to source feedstock and produce base oils, coupled with very firm demand and tight inventories,” the company explained.

In the previous two weeks, other producers had nominated posted price increases as well. Motiva implemented a posted price increase of 15 cents per gallon on its API Group II 220 cut and 25 cents/gal on its 600 cut, with an effective date of April 15.

Chevron communicated a 20 cents/gal posted price increase on all of its Group II grades, with an effective date of April 19.

According to reports, ExxonMobil raised its Group I base oils by 20 cents/gal across the board, its Group II EHC 65 grade by 30 cents/gal, and its Group II+ EHC 45 grade by 20 cents/gal on April 20.

Excel Paralubes implemented a 20 cents/gal posted price increase on its Group II base oils, effective April 20.

Calumet communicated a price increase of 20 cents/gal on all paraffinic base oils, effective April 25.

Paulsboro increased all of its Group I prices by 20 cents/gal on April 25.

Base oil prices in other regions have climbed as well, but there appeared to be interest in moving some cargoes from Asia to the U.S. and Latin America. A couple of parcels were being discussed for shipment from South Korea to the U.S. Gulf in May.

On the naphthenic base oils front, participants mentioned firm feedstocks, transportation, labor and other raw material costs as the main factors exerting pressure on prices, although crude oil prices have eased from the highs seen in March. Supply and demand was generally balanced to tight as a couple of producers were building inventories following turnarounds in the first quarter. The exit of a European producer from marketing its base oils in the Americas was also expected to contribute to the tightening of availabilities. At the same time, there has been improved demand seen from Europe for U.S. exports.

Downstream, lubricant, grease and other finished products manufacturers were not only dealing with increased production costs, but additive shortages as well. This has led to several blenders and manufacturers having to scale back operating rates or implement allocations on finished products, leading in turn to reduced base oil consumption. Perhaps the dampened demand affected Group III the most given its automotive applications, sources said.

However, despite these constraints, base oil requirements were described as generally healthy.

Several independent lubricant manufacturers, as well as a number of majors, announced price increases on finished products of up to 15% to 25%, which were scheduled to go into effect between March 28 and May 2. These adjustments come on the back of markups of up to 18% implemented by a majority of finished products manufacturers between March 1 and March 28.

Additive producers have also lifted additive prices due to the increase in base oil pricing and other factors. Two major additive producers raised prices by up to 15% on March 31 and April 15, respectively. A third additive supplier lifted prices by 12% (depending on terms and other conditions) on April 18. Additive producers had previously introduced price increases of up to 15% between January 31 and February 21.

Upstream, crude oil futures moved downward on Monday as China reinforced its COVID-19 related lockdowns and the U.S. Federal Reserve’s sharp rate increase position fanned concerns about a possible slowdown in global growth rates. West Texas Intermediate settled down by over 4% on Monday. However, futures then bounced back on Tuesday but remained volatile as analysts took in China’s plans to support its economy against a possible coronavirus lockdown in its capital Beijing.

On April 26, West Texas Intermediate (WTI) June futures settled at $101.70/barrel, compared to $102.56/barrel for May futures on April 19.

Brent futures for June delivery settled at $104.99/barrel on the CME on April 26, from $107.25/bbl on April 19.

Louisiana Light Sweet crude wholesale spot prices were hovering at $101.85/barrel on April 25 and had settled at $110.04/bbl on April 18, 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.