U.S. Base Oil Price Report


Motiva, Chevron, Petro-Canada, Avista Oil and Safety-Kleen joined the group of base oil producers who had communicated posted price increases over the last three weeks. The markups were thought to be mainly fueled by steeper crude oil and feedstock prices, although tightening supply of some grades was offering additional support to the initiatives.

Motiva adjusted up the posted price of its API Group II base oils on Aug. 15, but its Group II+ and Group III grades remained unchanged. The company’s Group II 100N grade was increased by 25 cents per gallon, and its 220N and 600N by 30 cents/gal.

Chevron communicated posted price increases for its Group II grades with an effective date of Aug. 15 “to reflect current market conditions,” the company noted. Chevron’s Group II 100N cut was raised by 30 cents/gal, and its 220N and 600N base oils by 20 cents/gal.

Petro-Canada will increase the price of its Group II 100/120N grade by 20 cents/gal, its 200/220N, 300/350N and 600/650N grades by 30 cents/gal and its Group II+ 100N grade by 25 cents/gal, with an effective date of Aug. 16. Postings of the company’s Group II 70N, Group II+ 65N and Group III grades will remain unchanged.

Rerefiners Avista Oil and Safety-Kleen have marked up their posted prices as well on increased production costs and snug supplies.

Avista informed its customers that the company would be increasing its Group II+ base oil by 25 cents/gal on Aug. 14, but the Group III grade remained unchanged. “The increase is due to changing fundamentals including rising production and feedstock costs along with a change in market conditions,” the company explained.

Safety-Kleen increased prices on its Group II+ 120-vis by 25 cents/gal, and its Group II+ 240-vis by 30 cents/gal, effective Aug. 15.

Although Excel Paralubes had announced a posted price increase last week, the increase implementation has been scheduled for this week, with the changes reflected in the Price Table below. The company’s Group II 110N will be lifted by 20 cents/gal, and its 225N and 600N will be raised by 30 cents/gal with an effective date of Aug. 16. The price of Excel’s Group II 70N grade was left unchanged.

In the previous two weeks, ExxonMobil, Paulsboro, HollyFrontier and Calumet also announced posted price increases of 20, 25 and 30 cents/gal, depending on the base oil grade, with implementation dates ranging from Aug. 4 to Aug. 11.

According to suppliers, climbing crude oil and feedstock prices drove the initiatives, but some base oil grades were also receiving support from a tighter supply and demand scenario, which was the result of several export transactions being finalized, plant turnarounds in the United States, and a pickup in domestic demand. Robust diesel consumption was also leading refiners to direct more feedstocks into the distillates stream and to dial down base oil production, reducing the product overhang.

Crude oil prices have climbed over the last several weeks, with West Texas Intermediate (WTI) hovering around $80 per barrel, compared with values around $70/bbl in early June, when base oil producers had decreased posted prices. Supply curbs by Saudi Arabia and Russia had helped catapult oil prices to new highs over the past seven weeks.

However, early this week, crude oil futures dipped on a stronger dollar and on concerns about China’s disappointing post-pandemic economic strength, which could lead to lower oil demand than previously anticipated. China cut key rates on a lackluster outlook for its economic well-being, but this move was not deemed substantial enough to guarantee a strong recovery.

On Aug. 15, West Texas Intermediate (WTI) September futures settled on the CME at $80.99/barrel, compared to $82.92/bbl on Aug. 8.

Brent futures for October delivery settled on the CME at $84.89/barrel on Aug. 15, from $86.17/bbl on Aug. 8.

Louisiana Light Sweet crude wholesale spot prices were hovering at $85.05/barrel on Aug. 14, from $84.14/bbl on Aug. 7, according to the Energy Information Administration.

Given rather lackluster domestic demand over the last few months, a majority of base oil grades were ample to cover requirements, but a number of cuts have tightened on account of a sudden uptick in demand ahead of implementation of the posted price increases and the conclusion of export transactions. The heavy-viscosity grade within the Group II segment was deemed particularly snug, with suppliers being more cautious about offering spot availability.

Additionally, some grades within the Group I and Group II categories were also in more limited supply because of recent or upcoming turnarounds.

Chevron completed a turnaround and catalyst change at its Group II plant in Pascagoula, Mississippi, in late July. The producer had covered contractual requirements during the outage, but had restricted its spot sales, according to sources.

Calumet also conducted a routine turnaround at its Group I and Group II plant in Shreveport, Louisiana, in late July. The maintenance only affected the unit that produces the light viscosity grades and the plant has been restarted, the producer said. Calumet had also built inventories to meet its obligations during the shutdown.

The Group I segment has tightened as HollyFrontier was preparing for a 45-day turnaround at its Tulsa, Oklahoma, Group I plant in late September and has restricted its spot sales, according to sources. The producer has also been utilizing more of its base stocks for the company’s own lubricant production.

A couple of producers have finalized several export transactions over the last few weeks, leading to a tightening of spot supplies and more stable pricing. There had been particularly keen interest from Brazil, Argentina, Mexico and Europe, sources reported. U.S. export prices were deemed competitive, and the shorter delivery time and less complicated logistics also attracted more buying interest than Northeast Asian offers at the moment. Buying appetite for U.S. product from Brazil remained strong because of upcoming turnarounds at local base oil plants, but buyers were hoping to achieve lower prices for upcoming transactions. Whether U.S. suppliers would acquiesce remained a question.

Prices for Group III supplies have also stabilized in the U.S., although availability from South Korea and the Middle East remained plentiful. Increased domestic production of Group III grades also allowed for more product to reach buyers who had previously depended solely on imports.

On the naphthenic side of the business, producers were evaluating market conditions given steeper crude oil prices in recent weeks. This week, prices were reported as stable and no adjustments emerged, except for those accounts whose contracts are linked to a diesel index, which have seen an uptick in pricing due to an increase in diesel values.

Demand for most pale oils was steady, with the lighter grades said to be snug due to robust demand from the transformer oil segment. Exports to Europe and Asia were also helping domestic suppliers keep a balanced supply and demand ratio, with little oversupply noted.

In downstream segments, finished lubricant demand remained lackluster and reports of lubricant manufacturers granting discounts to protect market share and promote new business continued to circulate. The ongoing string of base oil posted price increase announcements were expected to make suppliers reevaluate their pricing strategies and attempt to raise prices in the coming months, but market conditions were also weighing heavily on their decisions.

Similarly, additive manufacturers had also implemented discounts of about 3% to 4% into select accounts to reflect the June posted base oil price decreases but were expected to revisit their price structure given the fresh base oil increase initiatives that emerged in early August.

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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