U.S. Base Oil Price Report

Share

Paulsboro, Avista Oil, Safety-Kleen and SK Lubricants Americas implemented posted price increases during the week, following similar initiatives by other paraffinic producers who adjusted prices in late February. Meanwhile, crude oil and feedstock values continued to climb on an escalation of the Russian invasion of Ukraine, with international sanctions being implemented and several companies cutting ties with Russia, including oil giants BP and Shell, and Danish shipping company Maersk, which suspended non-essential shipments to and from Russian ports.

Late last week, API Group I base oil producer Paulsboro increased posted prices of its Group I SN100 and SN150 grades by 30 cents per gallon, its SN500 and SN700 by 20 cents/gal and its bright stock by 20 cents/gal as well, effective Feb. 24.

Get alerts when new Sustainability Blog articles are available.

Loading

Avista Oil informed its customers that the company was lifting the price of its Group II+ by 25 cents/gal and its Group III base oils by 35 cents/gal as of Feb. 28. The increase was due to changing fundamentals, including rising production and feedstock costs along with firm demand, the company explained.

Safety Kleen announced an increase of 25 cents/gal on its Group II+ 120 vis and of 35 cents/gal on its 220/240 vis at all locations, effective Feb. 23.

SK communicated a 30 cents/gal increase for all of its Group II+ and Group III base oils, which went into effect on March 1.

During the previous two weeks, a majority of paraffinic producers had nominated price increases of between 20 cents/gal and 35 cents/gal, depending on the grade and the supplier, with the lighter viscosities generally displaying the steeper hikes, given stronger demand and tighter supply. The effective dates were peppered between Feb. 15 and Feb. 23.

On the naphthenic base oils front, producers also implemented 25 cents/gal price increases for all naphthenic oils between Feb. 8 and Feb. 11, similarly driven by steep crude oil and feedstock costs and a snug supply/demand scenario. Availability of certain grades was strained, particularly for spot business, as several turnarounds have been completed recently, or are close to being finished.

Valero’s naphthenic base oils plant in Three Rivers, Texas, was heard to have wrapped up a turnaround last week. The plant can produce 2,400 b/d of naphthenic base oils, according to Lubes’n’Greases’ Base Oils Plant Data.

San Joaquin started a turnaround at its Bakersfield, California, refinery on Feb. 12. The unit, which has a nameplate capacity to produce 8,100 barrels per day of naphthenic base oils, will be restarted around March 5.

Cross Oil has slated a short turnaround at its Smackover, Arkansas, refinery in March. The producer will be taking the crude unit and vacuum tower down for a few days, but will continue to run the hydrotreater. Base oil availability should not be impacted, the company said. The base oil plant at the site has a capacity of 5,000 b/d of naphthenic base oils.

Both the paraffinic and naphthenic base oil increases were mostly triggered by the relentless advance of crude oil and fuel prices over the last several weeks, a trend that was exacerbated by the full-scale Russian invasion of Ukraine on Feb. 24.

Other issues that were affecting the base oils and lubricants industry were a lack of truck drivers, logistical and transportation issues, and a shortage of raw materials such as additives and certain packaging materials. Some finished lubricant manufacturers have had to implement allocation programs on certain products as a result, with one of them commenting that this was the first time in the company’s history that this had occurred. Some manufacturers also warned customers of potential shipment and delivery delays.

The escalating price of base oils, additives and other production costs have pushed additional lubricant manufacturers to seek increase initiatives over the last few weeks, following announcements by other manufacturers during the month of February. Blenders have called for increases of up to 18% on finished lubricants to be implemented between March 1 and March 28.

This week, Omni Industries confirmed that the company would be raising prices up to 15%, with an effective date of March 15. The company noted that the adjustment was due to the latest round of increases in additives and base oils.

Chemlube International also communicated an increase of up to 15%, effective March 17.  Smitty’s Supply was also reported to have announced an increase of up to 15%, with an effective date of March 21. Chevron will be raising finished product prices up to 15% as of March 28.

These announcements come on the heels of previous initiatives of up to 16% hikes for implementation between December 2021 and February 2022.

Two major additive producers had previously announced that they would be increasing prices by 15% on Jan. 31 and Feb. 21, respectively.

Upstream, crude oil futures jumped on Tuesday, with the U.S. crude benchmark hitting its highest level since July 2014 as Russian troops approached Ukraine’s capital. Prices had first reached the $100 mark last Thursday when Russia invaded Ukraine, prompting fears of supply disruptions from key exporter Russia.

On Monday, Canada said it was banning Russian oil imports, but so far it’s the only nation to target Russia’s energy complex directly, CNBC.com reported.

On March 1, West Texas Intermediate (WTI) April futures settled at $103.41/barrel, compared to $92.35/barrel for March futures on Feb. 22.

Brent futures for May delivery settled at $104.97/barrel on the CME on March 1, from $96.84/bbl for April futures on Feb. 22.

Louisiana Light Sweet crude wholesale spot prices were hovering at $98.73/barrel on Feb. 28 and had settled at $93.56/bbl on Feb. 18, according to the Energy Information Administration (there was no trading on Feb. 21 due to the President’s Day 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.