U.S. Base Oil Price Report


Additional posted price increases emerged this week on the back of last week’s producer-driven initiatives. All of these movements were fueled by steep crude oil and feedstock prices and other rising costs, along with a balanced-to-tight supply and demand scenario amid increased seasonal activity in downstream lubricant segments. A need to improve margins to encourage base oil production was also cited as a factor impacting pricing. Some of the latest initiatives came only about a week after the implementation of a previous round of increases.

Late last week, HollyFrontier communicated a posted price increase of 35 cents/gal on its Group I SN70/75, SN100, SN150 and SN250 base oils. The company also raised the price of its Group I SN525 by 40 cents/gal and its bright stock by 20 cents/gal. All of the increases went into effect on June 17.

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Petro-Canada informed customers of a posted price increase of 35 cents/gal on all of its Group II grades (70, 100, 200 and 300/350 vis), with the exception of the 600/650 vis cut, which will increase 40 cents/gal. The producer’s Group II+ 65 and 100 grades will also move up by 35 cents/gal, while its Group III 4 cSt, 6 cSt and 8 cSt cuts will be increased by 30 cents/gal, all with the same effective date of June 22.

Excel Paralubes communicated a posted price increase of 40 cents/gal on its Group II 70N, 110N and 600N base oils and 35 cents/gal on its 225N grade, with an effective date of June 17.

Rerefiner Safety-Kleen raised its Group II+ Kleen+ postings by 30 cents/gal, effective June 16.

A second rerefiner, Avista Oil, also announced a posted price increase of 35 cents/gal on its Group II+ and Group III base oils, effective June 17. The company explained that the adjustment was “due to various changing fundamentals, including very firm demand, both domestically and in Europe, coupled with tight inventories and rising feedstock cost.” The notification added that market pressure continued to mount as extra supply was not readily available, with spot offers almost non-existent due to the need to build inventories during the hurricane season.

SK Americas will raise all of its posted prices by 35 cents/gal, with an effective date of June 27.

Paulsboro’s increase initiative, which was communicated last week, went into effect on June 22. The company’s Group I light grades moved up by 35 cents/gal, its mid and heavy grades by 40 cents/gal and its bright stock by 20 cents/gal as portrayed in the Price Table below.

These initiatives follow announcements by Motiva, Chevron, ExxonMobil and Calumet, which resulted in base oil posted prices moving up by 20, 30, 35 and 40 cents/gal, depending on the grade and the supplier, between June 14 and June 22.

Aside from high crude oil and feedstock prices, a need to bolster base oil margins in light of recent increases in diesel values and heightened export interest for this product was said to be behind some of the initiatives. A source commented that diesel spreads were especially attractive to refiners at the moment, and this was impacting many refining decisions.

Fuel prices have increased steadily since the start of the Russian war on Ukraine in early February, as several nations have banned Russian crude oil imports, sending crude oil and refined products prices to new highs. With the official start of summer on June 21, experts predicted that more people in the United States would hit the road in coming weeks. Despite high gas prices and the prospect of a recession looming, Americans were on track to set a road trip record for July 4, the American Automobile Association predicted, as quoted in a CNN.com article. Approximately 42 million Americans – more than ever – were expected to take a road trip of 50 miles or more during the holiday weekend, the association said. 

Most base oil supplies were considered balanced-to-tight against current demand levels. Group I availability has improved given that a producer’s operating rates have ramped up and it was able to build inventories following some production hiccups. However, demand for Group I cuts remained robust, allowing for very little spot availability.

A turnaround at a Group II and Group III facility was scheduled to start in late June and the producer had started to build inventories ahead of the shutdown, tightening availability, while a second U.S. producer will be embarking on a turnaround in early 2023.

Spot supply of all grades remained limited in the U.S., and there have been discussions about several cargoes potentially moving from Asia to the Americas given strained supply and higher pricing in the region. About 11,000 metric tons were on the table for prompt shipment from South Korea to Ecuador. A 3,000-metric ton parcel was in discussions for lifting from South Korea to Callao, Peru, in the second half of June or early July.

There continued to be buying interest from Mexico, with several U.S. shipments heard concluded into the neighboring country, and there were reports that South Korean suppliers were exploring the possibility of shipping light viscosity base oils to Mexico as well. Buyers were starting to be more guarded about current prices as they were concerned that values would start to decline in coming weeks. A slowdown in lubricant segments in Mexico weighed on sentiment as well.

Group III supplies from the Middle East and Asia, together with domestic output, were heard to be sufficient to cover the current call for product in the U.S., although consumption was on an upward trend due to improved availability of additives and higher operating rates at blending facilities. This offered additional support to posted price increases, as well as spot indications.

On the naphthenic front, producers have communicated price increases over the last couple of weeks too. Cross Oil and Calumet announced price increases of 30 cents/gal on all viscosities, effective on June 15 and June 20, respectively. Previously, a vast majority of naphthenic producers had implemented increases of 25 cents/gal and 30 cents/gal between May 16 and May 31. Other suppliers continued to monitor the market closely as crude oil and feedstock prices remained volatile.

As was the case for paraffinic oils, the pale oil increases were driven by soaring crude oil and natural gas prices, inflation and other escalating costs, and received further support from healthy demand levels, particularly for the light grades used for transformer oils. There has been steady buying appetite for U.S. naphthenic base oils from Latin America as well.

Not surprisingly, the consecutive price increases on paraffinic and naphthenic base oils have prompted markups in downstream segments, with a fourth round of increases unfolding this month.

A number of lubricant, grease and other finished product manufacturers, including at least one major, have announced increases of up to 15%-20%, with implementation dates between July 5 and July 11. A previous series of increases called for increases of up to 8% to 15%, scheduled between May 27 and July 1.

On the additive side, sources reported that two major additive producers have communicated price increases of up to 10, 12 and 15%, depending on the product, expected to go into effect between June 27 and July 1. This was the third round of additive increases since the beginning of the year, with previous movements implemented in March through April and January through February.

Upstream, crude oil futures continued to hover at elevated levels, but have come off their highs earlier in the month. On Monday, oil prices climbed in volatile trading, as traders focused on tight supplies over slowing global economic growth, while the mood was more optimistic on Tuesday after U.S. President Biden commented that a recession was not inevitable.

Meanwhile, Russian crude barrels were being lapped up by China – the world’s biggest crude oil importer – at discounted prices. China’s crude oil imports from Russia soared 55% from a year earlier to a record level in May, displacing Saudi Arabia as the top supplier, Reuters reported.

On June 21, West Texas Intermediate (WTI) July futures settled at $110.65/barrel, compared to $118.93/barrel on June 14. In comparison, in June last year, WTI futures were hovering at around $70/barrel.

Brent futures for August delivery settled at $114.65/barrel on the CME on June 21, from $121.17/bbl on June 14.

Louisiana Light Sweet crude wholesale spot prices were hovering at $109.86/barrel on June 17 and had settled at $122.22/bbl on June 13, according to the Energy Information Administration. (There was no trading on June 20 due to the Juneteenth holiday).

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.