U.S. Base Oil Price Report


A number of producers announced posted price increases this week on the heels of ExxonMobil’s initiative a week ago. Paulsboro, HollyFrontier, Calumet and Excel Paralubes intended to mark up postings, with the price hikes thought to be mostly driven by firm crude oil and feedstock prices. Powerful storms hitting the East Coast of the United States claimed several lives and left nearly 400,000 homes and businesses without power on Tuesday, but no production disruptions were reported by the publishing deadline.

The fresh base oil increase announcements did not seem to impact demand significantly, although a few buyers rushed to place orders ahead of the increase implementation dates.

HollyFrontier increased its API Group I prices on Aug. 7, with the 70 through 150-vis grades moving up by 25 cents per gallon, the 250-vis grade by 30 cents/gal, and the 525-vis cut and bright stock by 20 cents/gal. HollyFrontier was expected to start a turnaround at its Group I plant in Tulsa, Oklahoma, in September and has limited its spot supply offers, according to sources.

As reported last week, Paulsboro will be marking up its Group I posted prices on Aug. 9. The company’s Group I SN100 and SN165 grades will be raised by 25 cents/gal; and its SN500, SN700, and bright stock by 20 cents/gal. Paulsboro’s postings will be adjusted on the Price Table below this week given their effective date.

Calumet announced it would be increasing the posted price of its Group I 600-vis and bright stock by 20 cents/gal. The company’s Group II 75/80, 100 and 150-vis will be marked up by 25 cents/gal and its Group II 325-vis by 30 cents/gal. The effective date of the increases is Aug. 11.

Excel Paralubes communicated posted price increases that will go into effect on Aug. 16. The company’s Group II 110N will be lifted by 20 cents/gal, and its 225N and 600N will be increased by 30 cents/gal. The increases will be reflected in the Price Table below when they go into effect next week.

According to reports, ExxonMobil had increased its posted prices on Aug. 4. The company’s Group I SN100/150 was adjusted up by 25 cents/gal, its SN400 by 30 cents/gal and its SN800 and bright stock by 20 cents/gal. The company also raised the price of its Group II EHC65 (220 vis) by 30 cents/gal and its Group II+ EHC45 (150 vis) by 25 cents/gal. The EHC120 grade, which is not included in the Price Table below, will go up by 30 cents/gal. All the increases went into effect on Aug. 4.

Crude oil prices have advanced significantly compared to two months ago, with West Texas Intermediate vaulting over the $80 per barrel mark. Back in early June, WTI futures were hovering at around $70/barrel.

Crude oil futures recovered some territory on Monday after incurring small losses the previous session. On Tuesday morning, both the West Texas Intermediate and Brent benchmarks were trading down because of expectations of lower oil demand in China, but by late afternoon, values had made a complete turnaround as an escalation in the Russia-Ukraine conflict ignited supply concerns.

Crude oil inventories in the U.S. reflected a surprising build this week, American Petroleum Institute data showed on Tuesday – just one week after seeing the largest dip in inventories ever of 15.4 million barrels, OilPrice.com reported.

On Aug. 8, West Texas Intermediate (WTI) September futures settled on the CME at $82.92/barrel, compared to $81.37/bbl on Aug. 1.

Brent futures for October delivery settled on the CME at $86.17/barrel on Aug. 8, from $84.91/bbl on Aug. 1.

Louisiana Light Sweet crude wholesale spot prices were hovering at $84.14/barrel on Aug. 7, from $83.90/bbl on July 31, according to the Energy Information Administration.

The base oils market appeared to be in the throes of the summer doldrums and activity has been lusterless, which is not unusual for August as many players are away on holiday and most purchase requirements have been met. However, demand going into the summer had been similarly soft, with some participants attributing this to healthy inventories and a cautious buying attitude on expectations of lower prices as the year wore on. Finished lubricant demand has also been less vibrant than expected ahead of the oil changing season this year, likely affected by economic uncertainties and inflationary pressures in the first part of 2023.

Most base oil grades appeared to be available, with the lighter grades described as balanced-to-tight. Group II supplies will likely see a boost in the coming weeks as Chevron was heard to have completed a turnaround at its Group II plant in Pascagoula, Mississippi. The maintenance program had started in late June and the producer had covered contractual requirements during the outage, but had restricted its spot sales, sources noted.

Calumet has completed a routine turnaround at its Group I and Group II plant in Shreveport, Louisiana, which started in late July. The maintenance only affected the unit that produces the light viscosity grades and it was completed as planned, with start-up underway, the producer said. Calumet had also built inventories and was able to maintain supply during the shutdown.

The Group II heavy grades have tightened, and export prices were heard to be steady. The lighter grades received additional support from firming diesel values. Some refiners may favor production of diesel to the detriment of base oil output, leading to lower supply levels. Nevertheless, there were continuing discussions of possible export shipments to South America – mainly, Brazil and Argentina, as well as Mexico and Europe. Despite earlier expectations of potential shipments from Asia to Mexico, it appears unlikely that prices can match those offered by U.S. suppliers. For the time being, U.S. export prices continue to be attractive for buyers in Latin America amid tight supplies in that region and a need to continue to import base stocks.

The Group III segment was well supplied and there was still some downward pressure on prices, but values seemed to have stabilized for the time being on more limited offers. Many buyers still preferred to purchase Group II grades whenever applications allowed given the price delta between the two base oil groups, and this contributed to the lengthening of Group III availability.

On the naphthenic side of the business, producers were monitoring market conditions as production costs have increased on steeper crude oil prices. Participants said that they would observe crude oil and feedstock prices over the next few weeks to see if they sustained their firming trend to decide whether any price adjustments were warranted. Those accounts whose contracts are linked to a diesel index have seen prices climb due to steeper diesel values.

Pale oil demand remained healthy, lending pricing additional support, sources said. The light grade requirements were flourishing given strong performance of the transformer oil segment. Export requirements from Europe and Asia were drawing cargoes away from the domestic market, allowing for a more balanced supply and demand scenario.

In downstream segments, there had been reports of lubricant manufacturers granting discounts to protect market share and promote new business, but the current wave of base oil posted price increases may make suppliers reevaluate their pricing strategies. As reports of base oil price hikes started to emerge, some blenders hurried to place orders in order to beat potential price hikes.

Additive manufacturers have also implemented discounts in the realm of 3% to 4% into select accounts to reflect the June posted base oil price decreases but may halt these initiatives as base oil prices embarked on an upward trek this month.

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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