U.S. Base Oil Price Report

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Over the last few days, a vast majority of paraffinic producers and rerefiners communicated posted price decreases, shortly after SK Lubricants Americas first stepped out with a downward price adjustment that went into effect on Jan. 1. Naphthenic producers also announced price decreases this week. Heavy rains and gusty winds in California caused flooding, mudslides and transportation disruptions along the U.S. West Coast.

Motiva communicated a posted price decrease for its API Group II, Group II+ and Group III grades which became effective retroactively to Jan. 1. The company’s Group II 100N and 220N base oils were adjusted down by 50 cents/gal, and its Group II 600N and all of its Group III grades were lowered by 20 cents/gal. The producer also implemented a $1.30/gal decrease on its Group II+ 50 vis (Ultra 2) and $1.95/gal on its Group II+ 70 vis (Ultra 3) cuts, but these larger revisions were thought to be a market price adjustment to bring posted prices more in line with current transaction levels.

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With an effective date of Jan. 10, Chevron adjusted down its Group II 100R by 50 cents/gal, its 220R by 55 cents/gal and its 600R by 25 cents/gal  “to reflect market conditions,” the company explained.

Petro-Canada/HF Sinclair announced that postings for its Group II 70N base oil would be lowered by 40 cents/gal, its 100N and 200N by 50 cents/gal, and its 325N and 600N by 20 cents/gal. Within the Group II+ category, the company will decrease both its 65N and 100N by 40 cents/gal, and within the Group III segment, prices for its 4cSt, 6cSt and 8cSt grades will be adjusted down by 20 cents/gal. All of these adjustments will go into effect on Jan. 12.

HollyFrontier’s Group I posted prices will decrease by 50 cents/gal, effective Jan. 16.

Calumet announced a posted price decrease of 50 cents/gal on all paraffinic grades, effective Jan. 16.

According to reports, ExxonMobil will be lowering its Group I postings by 50 cents/gal, including its bright stock; its Group II EHC65 by 60 cents/gal, and its Group II+ EHC45 by 50 cents/gal, with an effective date of Jan. 16. (The heavy viscosity EHC120 will be adjusted down by 25 cents/gal, but this grade is currently not listed in the Price Table below).

Excel Paralubes informed its customers that the company would be decreasing the posted price of its Group II 70N and 225N base oils by 50 cents/gal, its 110N grade by 45 cents/gal and its 600N base oil by 20 cents/gal, with an effective date of Jan. 16.

Paulsboro will be lowering its Group I prices by 50 cents/gal on Jan. 19, and the adjustments will be reflected in the Price Table below next week when they go into effect.

SK had previously lowered its Group II+ 3 cSt prices by 40 cents per gallon, its Group III 4 cSt grade by 15 cents/gal and its 6/8 cSt cuts by 25 cents/gal, effective Jan. 1.

Rerefiner Safety-Kleen announced a 50 cents/gal reduction on its Group II+ RHT120 and RHT240 base oils, effective Jan. 16.

Avista Oil communicated a 50 cents/gal decrease on its Group II+ grade, effective Jan. 16.

On the naphthenic base oils front, Ergon announced decreases in pricing of naphthenic oils in the North American market, effective Jan. 16. The company’s process oils, base oils and ink oils will be reduced by 30 cents/gal, while its dielectric fluids will be reduced by 20 cents/gal.

Process Oils announced that the company would decrease naphthenic oils effective Jan. 16 as well. The company’s Corsol, L-Series and B-Series products will be reduced by 30 cents/gal and the CrossTrans 206 products will be reduced by 20 cents/gal. As part of a recent agreement, Process Oils – which is part of the Ergon family of companies – will be marketing naphthenic base oils produced by Cross Oil at its refinery in Smackover, Arkansas.

Calumet also announced a 30 cents/gal decrease on all of its naphthenic base oils, with an effective date of Jan. 16. 

Much like paraffinic base oil producers, pale oil suppliers had granted temporary value allowances or adjustments (TVAs) to select accounts on the heavy grades in December in order to stimulate orders at a time when inventories were starting to lengthen and demand had declined. However, TVAs on paraffinic oils have now ceased, given the posted price adjustments that will be implemented instead.

A number of turnarounds taking place in the first quarter, together with an expected seasonal uptick in demand, were expected to bring supply and demand more into balance. Furthermore, many buyers finished the year with low inventories to avoid tax repercussions and were preparing to return to the market to acquire product. In fact, suppliers noted budding interest from consumers that appeared eager to replenish stocks this week, particularly after the price decrease announcements had started to emerge.

An extended turnaround and catalyst change at a large Group II facility on the Gulf Coast has been scheduled to start in late January and last almost two months. The producer was expected to have built stocks to cover requirements during the outage, but spot volumes were anticipated to be reduced. A second Group II producer has also scheduled maintenance work in the first quarter. A third Group I/Group II producer was considering a two week-turnaround starting at the end of March.

In the naphthenic base oils segment, San Joaquin Refining will be installing a a new vacuum distillation tower at its refinery in Bakersfield, California, starting later this month, and expects the unit to be down for four weeks.

In the downstream lubricant segment, prices were expected to come under pressure due to the decreases announced for base oils. Consumers were likely to request lower prices as feedstock prices were on a downward trend, and some suppliers had already started to concede to these requests in December.

Upstream, West Texas Intermediate crude oil futures moved lower on Tuesday morning on expectations that further interest rate hikes in the U.S. would slow the country’s growth rate and affect other nations as well, also resulting in reduced oil demand. However, values reversed course and edged up later in the day as the U.S. government forecast record global oil consumption and the dollar hovered at seven-month lows, Reuters reported.

Crude oil futures had climbed 1% on Monday as well after China announced a reopening of its borders over the weekend, which triggered hopes for increased crude oil and refined products consumption.

On Jan. 10, WTI February futures settled on the CME at $75.12/barrel, compared to $76.93/bbl on Jan. 3.

Brent futures for March delivery settled on the CME at $80.10/barrel on Jan. 10, from $82.10/bbl on Jan. 3.

Louisiana Light Sweet crude wholesale spot prices were hovering at $76.19/barrel on Jan. 9, from $81.56/bbl on Dec. 30, according to the Energy Information Administration. (There was no trading on Monday, Jan. 2 due to the year-end holidays).

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.

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