U.S. Base Oil Price Report


Motiva stepped out with a posted price decrease late last week, a few days after Chevron’s and SK enmove’s adjustments had gone into effect. Avista also communicated a decrease following these announcements. The decreases were thought to have been triggered by sluggish demand and growing supplier inventories. A few producers were still evaluating market conditions as crude oil prices reversed course last week, following a decision by OPEC+ members to curb oil production by over a million barrels per day.

Motiva communicated a decrease of 30 cents per gallon on its API Group II 105 vis base oil, and 40 cents/gal on its 220-vis and 600-vis grades. The company also lowered its Group II+ 2 centiStoke and 3 cSt grades by 25 cents/gal and its Group III 4 cSt, 6 cSt and 8 cSt base oils by 25 cents/gal as well. All of the decreases went into effect retroactively on April 3.

Avista Refining and Trading announced a 30 cents/gal posted price decrease on its Group II+ and Group III base oils, effective April 11.

Approximately two weeks ago, Chevron had similarly adjusted down its Group II 100R by 30 cents per gallon, and its 220R and 600R grades by 40 cents/gal on March 28.

SK decreased the posted price of its Group III 4 cSt grade by 15 cents/gal and its Group III 6 cSt and 8cSt cuts by 20 cents/gal on April 1. The price of the company’s Group II+ 70N was not revised.

Market participants wondered whether some of the producers that had granted TVAs over the last couple of months would continue offering discounts in the same manner or would instead implement posted price decreases. Within the Group II segment, TVAs had been hovering between 30 cents/gal and 85 cents/gal.

Buyers also commented that Group II supplies had been adequate to meet requirements, despite a prolonged turnaround at Excel Paralubes’ Lake Charles, Louisiana, plant. The unit was expected to be restarted on April 10, after a two-month turnaround that needed to be extended by two weeks due to technical difficulties encountered during the restart process. While the producer was expected to have almost no product left in its tanks after the shutdown, sources said it was likely to start shipping product out soon.

A Group II+ and Group III rerefiner was also heard to have performed a brief one-week maintenance program in mid-March.

The Chevron Group II plant in Pascagoula, Mississippi, was slated to be taken offline for a turnaround during this quarter. Once the plant resumes production, sources expected Group II supply to become more plentiful in the U.S. as both Excel and Chevron will have installed new catalysts. The posted price decreases were thought to be an incentive for buyers to place more orders in coming weeks and avoid bulging inventories.

While supply has also been sufficient to meet demand in the Group I segment, base oils in this category were described as snug, given a recent turnaround at a key production unit and refinery run adjustments to produce more distillates instead of base oils given more attractive margins earlier this year. The conclusion of export transactions involving Group I base oils also helped producers attain more balanced supply positions.

Several export shipments were concluded in March and negotiations continued for April and May shipments, with a 5,000 to 10,000-metric-ton cargo discussed for loading in the U.S. Gulf to Brazil in April. There were also discussions to move Group I and Group II cargoes to Mexico, where consumer inventories were heard to be low.

Availability in the Group III segment was deemed balanced-to-long, with U.S. requirements mostly covered by imports from Asia and the Middle East. Spot prices have softened, with continuous price pressure coming from increased domestic production which was competing with imported volumes.

On the naphthenic base oils front, prices were described as steady-to-soft, as some suppliers have resorted to granting discounts to stimulate demand. Supply and demand of most pale oils was deemed largely balanced, although the lighter grades were more plentiful than their heavier counterparts.

Changes to refinery operations and the feedstocks stream as diesel prices had come down from recent highs were also affecting supply levels. Healthy buying interest from Europe and Asia was offering opportunities for U.S. producers to find a home for their products since domestic appetite was still lackluster.

Domestic finished lubricant demand has been disappointing too, and this was partly attributed to healthy consumer inventories and economic uncertainties, including inflation and the prospects of a potential recession. The posted price decreases so far announced by some base oil suppliers have encouraged lubricant buyers to request decreases on finished products. A number of lubricant manufacturers have agreed to discounts in order to protect market share or encourage fresh orders. On the other hand, the price of some specialty products and greases has moved up due to steeper production costs and tight supplies.

Some additive manufacturers have also given in to the pressure, with discounts between 2% and 5% being mentioned as sellers hoped to increase sales, while availability of most additives was deemed ample.

Upstream, crude oil futures climbed on Tuesday on expectations of the potential release of an economic stimulus plan in China given weak consumer demand, while healthy oil demand in the rest of Asia and lower U.S. crude stockpiles also provided support to crude prices.

On April 11, West Texas Intermediate (WTI) May futures settled on the CME at $81.53/barrel, compared to $80.71/bbl on April 4.

Brent futures for June delivery settled on the CME at $85.61/barrel on April 11, from $84.94/bbl for May futures on April 4.

Louisiana Light Sweet crude wholesale spot prices were hovering at $81.79/barrel on April 10, from $82.45/bbl on April 3, 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