U.S. Base Oil Price Report


Several additional base oil producers and rerefiners communicated posted price adjustments over the week, including ExxonMobil, Excel Paralubes, Calumet, HollyFrontier, Petro-Canada, Paulsboro, Safety-Kleen and Avista. The price revisions appeared to be driven by prevailing supply and demand conditions along with softer crude oil and feedstock prices compared to earlier in the year.

According to reports, ExxonMobil will be lowering the posted price of its API Group I SN115 and SN150 grades by 25 cents per gallon, its SN330/400 cuts by 30 cents/gal, and its SN600/800 and bright stock grades by 20 cents/gal. The producer will also mark down its Group II EHC65 grade by 30 cents/gal and its Group II+ EHC45 grade by 25 cents/gal. All these decreases will go into effect on June 14.

Excel Paralubes informed its customers that effective June 8, its Group II 70 and 100-vis base oils would be adjusted down by 25 cents/gal and its Group II 220 and 600-vis base oils by 30 cents/gal.

Calumet will also adjust posted prices “due to market conditions” on June 19, according to a company communication. Calumet’s Group I 600-vis and bright stock cuts will be adjusted down by 20 cents/gal. The company’s Group II 75/80, 100 and 150-vis grades will be lowered by 25 cents/gal and its Group II 325-vis grade by 30 cents/gal. Calumet has also said that its Calsol P-series of process oils would also be included in this price change.

HollyFrontier communicated that the company will be decreasing postings on June 15. The company’s Group I SN70, SN100, SN150 grades would be adjusted down by 25 cents/gal; its SN250 by 30 cents/gal and its SN525 and bright stock by 20 cents/gal.

Petro-Canada will also be decreasing posted prices on June 15. The company’s Group II 70N will be adjusted down by 20 cents/gal; its Group II 100N, 200N, 300N and 600N grades will be down by 30 cents/gal. Petro-Canada’s Group II+ 65N will be marked down by 20 cents/gal; its Group II+ 100N by 25 cents/gal and its Group III 4 centiStoke, 6 cSt and 8 cSt grades by 20 cents/gal.

Paulsboro will be decreasing postings on June 19, with its Group I 100/165-vis moving down by 25 cents/gal and its Group I 500, 700, 850-vis – which is not included in the Price Table below – and bright stock grades edging down by 20 cents/gal.

Rerefiners Safety-Kleen and Avista have also communicated price reductions.

Safety-Kleen lowered the posted price of its Group II+ 120 grade by 20 cents/gal, and its Group II+ 240 grade by 35 cents/gal, effective June 8.

Avista Refining and Trading announced a decrease of 20 cents/gallon on its Group II+ grade and also 20 cents/gal on its Group III grade, effective June 12. The company noted that all new orders shipped on or after that date would be billed at the new price and that the decrease was “due to changing fundamentals, including: excessive inventories and unprecedented inflation leading to lack of demand in the industry.”

During the previous two weeks, SK Enmove, Motiva and Chevron had communicated posted price decreases as well.

SK reduced the price of its Group II+ 70N base oil by 5 cents/gal, its Group III 4 centiStoke by 10 cents/gal and its 6 cSt and 8 cSt cuts by 15 cents/gal on June 1.

Motiva lowered its Group II posted prices by 30 cents per gallon, and its Group II+ and Group III prices by 20 cents/gal, effective June 1.

Chevron decreased the price of its Group II 100R by 20 cents/gal, its 220R by 35 cents/gal and its 600R by 30 cents/gal, with an effective date of June 6.

The downward pressure on base oil pricing was fueled by lackluster demand, growing inventories and softer crude oil and feedstock values. Most refiners were running refineries at full rates given booming gasoline demand and the start of the summer driving season. According to a Reuters article, U.S. motorists were enjoying a so-called “Goldilocks gasoline market” with strong production and moderate prices – down 31% from peaks last year following Russia’s invasion of Ukraine.

Base oil output in particular was given a boost by the fact that refiners preferred to stream more feedstocks into base oil production as distillates margins were less attractive.

Supplies of Group II grades have grown, despite recent export transactions, an ongoing turnaround at a key base oil facility and some production issues at another major facility.

A U.S. Gulf production facility was heard to be experiencing production issues that have affected Group II output, but further details were unavailable.

A turnaround that includes a catalyst change at Chevron’s Group II plant in Pascagoula, Mississippi, was also expected to put a dent on domestic supplies of Group II grades. The shutdown was heard to have started the first week of June, with the plant expected to be restarted around June 21. The producer was expected to meet contractual obligations but may limit spot offers during and after the turnaround. However, once the plant resumes production, additional volumes were anticipated to be introduced into the supply system.

Calumet has scheduled a routine turnaround at its Group I and Group II plant in Shreveport, Louisiana, in the second half of July. The producer was also planning to build inventories to meet requirements during the outage.

Buying interest for Group I and Group II base oils from Brazil was heard to be robust, particularly given production issues at local refineries. Given falling domestic prices in the U.S., importers expected to be able to secure product at attractive levels. Similarly, in Mexico, buyers were hoping that delaying purchases would allow them to purchase cargoes at lower prices, and trading activity has been subdued over the last few days as a result.

Supply and demand conditions in the Group III segment were described as balanced to slightly long. While imports continued to flow unobstructed into the U.S., turnarounds at a plant in Europe and another facility in Asia were limiting the spot availability of Group III grades, but this situation was likely to change once the plants are restarted. A couple of U.S. Group II producers with the ability to produce Group III grades were reportedly manufacturing additional Group III base oils as these would fetch better margins, and this was helping fill any gaps left by imports coming from Canada, South Korea and the Middle East. Spot transactions were under pressure, mainly because the 6 cSt and 8 cSt grades have started to lengthen, with spot numbers slipping by a few cents per gallon week on week.

On the naphthenic front, prices were reported as steady, supported by balanced-to-tight fundamentals. There have been downward price movements on those accounts whose formula-based pricing is linked to diesel values. Despite some softer pockets in the U.S., the naphthenic segment of the market has been able to keep inventories in check due to healthy demand from Europe and Asia.

Downstream, finished lubricant buyers have started to pressure blenders for lower pricing given that base oil price decreases have started to be implemented. At the same time, lubricant manufacturers were also hoping to get a respite from current additive values. Few additive decreases have been granted in recent months, although some accounts have seen discounts, depending on volumes and other terms.

Upstream, crude oil futures jumped by over 3% on Tuesday after steep losses the previous session on news that China’s central bank had lowered a short-term lending rate, which was expected to help the country in its post-pandemic economic recovery. If China’s economy strengthens, fuel demand was expected to rise, and this gave a boost to crude oil futures as China is the world’s largest crude importer.

On Monday, crude futures had plunged by almost 4% after discouraging news about China’s economic well-being were released last week.

On June 13, West Texas Intermediate (WTI) July futures settled on the CME at $69.42/barrel, compared to $71.74 bbl on June 6.

Brent futures for August delivery settled on the CME at $74.29/barrel on June 13, from $76.29/bbl on June 6.

Louisiana Light Sweet crude wholesale spot prices were hovering at $69.53/barrel on June 12, from $74.44/bbl on June 5, 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/

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