U.S. Base Oil Price Report


Motiva, ExxonMobil, Excel Paralubes, Holly-Frontier, Petro-Canada, Chevron, Calumet, Paulsboro, Safety-Kleen and Avista Oil communicated posted price increases during the week, with the mark-ups driven by steeper crude oil and feedstock prices, and a need to improve base oil premiums against competing fuel values. Several naphthenic producers also announced increases this week, following San Joaquin’s Refining’s announcement the previous week.

The United Auto Workers Union – which was unable to reach an agreement with auto makers General Motors, Ford and Stellantis last week – went on strike at several auto plants and may scale it up in the coming days. Vehicle production outages may impact demand for factory-fill lubricants and other automotive fluids, leading some blenders to adopt a cautious base oil buying stance.

Motiva increased its API Group II posted prices by 30 cents per gallon and its Group II+/Group III prices by 15 cents/gal on Sept. 15.

According to reports, ExxonMobil raised the posted price of its Group I base oils by 20 cents/gal, with the exception of bright stock which remained unchanged. The producer’s Group II EHC65 was increased by 15 cents/gal, and its Group II+ EHC45 by 20 cents/gal, with an effective date of Sept. 20. Letters to customers informing them about the price initiative were sent out on Sept. 15, with the producer explaining that the “main drivers for this move are rising cost of feed, stronger base stock demand, and dynamics of fuels/diesel market,” adding that the company would continue to monitor the market weekly and make pricing decisions based on its assessment.

Excel Paralubes increased its Group II grades by 25 cents/gal, with an effective date of Sept. 18.

HollyFrontier increased its Group I grades by 20 cents/gal, with the exception of bright stock which remained unchanged, effective Sept. 19.

Petro-Canada communicated an increase on the posted price of its base oils which will go into effect on Sept. 19 as well. The company increased its Group II 70N, 100N, 200N, 350N, and 600N by 30 cents/gal. The Group II+ 65N and 100N cuts were marked up by 20 cents/gal, while the Group III 4 centiStoke, 6 cSt and 8 cSt base oils increased by 15 cents/gal.

Effective Sep. 19, Chevron’s U.S. Gulf Coast posted prices increased to reflect current market conditions. The producer’s Group II 100R moved up by 30 cents/gal, and its 220R and 600R increased by 25 cents/gal.

Calumet announced price increases for both its paraffinic and naphthenic base oils, with an effective date of Sept. 25. The producer’s Group I postings will increase by 20 cents/gal, with the exception of bright stock, which will remain unchanged, and its Group II postings will edge up by 30 cents/gal.

Paulsboro will be raising its Group I prices by 20 cents/gal, with the exception of bright stock, which will remain unchanged, effective Sept. 25.

Rerefiner Safety-Kleen raised the posted price of its Group II+ RHT120 and RHT240 grades by 30 cents/gal, effective Sept. 15.

Avista Oil will be increasing its Group II+ and Group III grades by 30 cents/gal, with an effective date of Sep. 25.

Aside from climbing crude oil and vacuum gas oil prices, a tighter supply and demand scenario offered additional support to the increases. While domestic demand has not been stellar, some segments showed a small uptick in buying appetite over the last couple of weeks as buyers foresaw that prices might be going up and rushed to place orders ahead of any price announcements, sources noted.

Healthy export business also contributed to the tighter conditions. There was steady demand from Brazil, where ongoing and upcoming turnarounds and reduced local supplies has led consumers to seek alternative sources of product. Many buyers have turned to the United States for their supplies, and suppliers were eager to conclude business in order to keep U.S. inventories in check. Reports of Middle Eastern product being offered to the West Coast of South America have also emerged, as prices seemed to be competitive compared to indications for Asian products.

There has been keen buying interest for the lighter grades to be used for diesel blending in Mexico, which also contributed to a tightening of these grades in the U.S.

Many buyers and suppliers have not kept very high inventories during the Atlantic basin hurricane season – which runs from June 1 until Nov. 30 – and most major storms occur in the August-September stretch, so there were a few players who expressed concern about potential supply disruptions over the next few weeks. This week, participants kept an eye on Hurricane Nigel as it moved across the central Atlantic, but the storm was expected to move northward and then northeastward as the week progressed, away from Bermuda without having any impact on the islands.

Additionally, a number of refiners were trying to produce as much diesel as possible given a diesel shortage and soaring prices. As a result, they streamed more feedstocks into distillates production, which resulted in reduced base oil output. Experts explained that the diesel scarcity could be partly attributed to Russia and Saudi Arabia cutting their production of crudes that are richer in diesel. The situation could get worse in the winter months, when demand for fuels like diesel tends to increase. Russia may also cut diesel shipments to other countries further, even though volumes have already been restricted by international sanctions.

The Group I segment appeared to be the tightest in terms of supply, partly because of reduced refinery run rates, but also because of plant maintenance. HollyFrontier just started a turnaround at its Tulsa, Oklahoma, Group I plant, which has exacerbated the snug conditions. The unit was taken down for a 45-day maintenance program, and the producer had limited its spot offers in the weeks leading up to the turnaround in order to build inventories and meet contractual obligations during the outage.

On the naphthenic base oils front, similar fundamentals to those observed in the paraffinic segment were impacting pricing, with producers stepping out to announce increases during the last couple of weeks. Balanced-to-tight market conditions also supported the price initiatives. Exports to South and Central America and Asia were also healthy, drawing down domestic inventories and propping up prices.

San Joaquin Refining raised its naphthenic base oil prices by 25 cents/gal and 30 cents/gal, depending on the location, on Sept. 15, and adjusted up export prices on that date as well.

Calumet communicated that it would be raising prices on all of its naphthenic base oils by 25 cents/gal on Sept. 25.

Ergon announced an increase in pricing of its naphthenic oils in the North American market effective Sept. 22. Ergon’s process oils, HyGold base oils and ink oils will increase by 25 cents/gal, and its dielectric fluids and 60 viscosity products will move up by 30 cents/gal. 

Along similar lines, Process Oils Inc. communicated a price increase of 25 cents/gal and 30 cents/gal for its naphthenic oils in the North American market, effective Sep. 22. 

Base oil producers were anxiously monitoring developments on the crude oil side, as numbers continued to move up. Crude oil futures hit 10-month highs on Tuesday on growing supply concerns as shale output in the U.S. has been disappointing and OPEC+ output cuts that have been extended until the end of the year were expected to strain supply. However, numbers eased before the session was over as investors took profits, Reuters reported.

On Sept. 19, West Texas Intermediate (WTI) October futures settled on the CME at $91.20/barrel, compared to $88.84/bbl on Sept. 12.

Brent futures for November delivery settled on the CME at $94.34/barrel on Sept. 19, from $92.06/bbl on Sept. 12.

Louisiana Light Sweet crude wholesale spot prices were hovering at $93.57/barrel on Sept. 18, from $89.40/bbl on Sept. 11, 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.

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