U.S. Base Oil Price Report


The posted price decreases implemented earlier this month seemed to have elicited the response that suppliers had hoped for as orders have picked up, although at a slower pace than at the same time in pre-pandemic years. A majority of paraffinic base oil producers lowered prices between 15 cents per gallon and 60 cents/gal during the first two weeks of the year, while naphthenic producers marked down pricing by 20 cents/gal to 30 cents/gal on Jan. 16.

As December and January are typically slow months in terms of buying activity and inventories had lengthened, producers had hoped that reducing prices would provide the necessary incentive to kickstart demand.

Get alerts when new Sustainability Blog articles are available.


A number of sellers acknowledged that demand was far from strong but noted the first few signs of improved buying activity. “I think buyers were waiting for the price decrease,” a source noted, with consumers thought to have delayed purchases for as long as possible as they expected suppliers to trim prices. Buyers’ expectations had been supported by falling spot numbers and they had also viewed suppliers’ temporary values allowances or adjustments in the previous months as an overture to a general posted price decrease.

Participants agreed that there was still a long way to go in terms of demand, but that activity was “better than expected.” Suppliers prepared for increased buying appetite in February and March, as lubricant and finished products manufacturers start to build stocks for the busy spring production cycle and oil changing season, and this should help balance supply and demand. Furthermore, some decreases on contract volumes will kick in from February as well. “February will give us a better trend line,” a source commented.

There has also been revived buying interest for U.S. product in Mexico, particularly for API Group I grades. These base oils were heard to be tighter in the U.S. than Group II cuts because Group I refineries had adjusted down production in the previous months in favor of distillates output as margins had been more attractive. Diesel inventories were described as extremely low in the U.S., which could again provide added incentive to refiners, although base oil margins remained higher for the time being. Bright stock demand has been holding at steady levels, supporting pricing, which saw fewer downward adjustments on the spot front, sources said.

Group II supply was expected to tighten in coming weeks on the back of an extended plant turnaround and increased demand. A couple of cargoes were heard to have been sold for export as well, with one lot expected to be shipped from Pascagoula, Mississippi, to West Coast India in late January or early February. There have been far fewer shipments to India than in previous years due to pricing, steep freight rates, plentiful base stock availability in Asia and tighter supply in the U.S. Brazil had also been an avid patron of U.S. Group I and Group II grades, but buying interest has weakened on lackluster lubricant consumption, domestic price uncertainty and expectations of further price cuts.

Group III supplies were deemed balanced to long, depending on the cut, as additional cargoes from Northeast Asia and the Middle East continued to find their way into the U.S., with demand remaining fairly constant. These conditions were placing downward pressure on prices, particularly those of the 6 centiStoke and 8 cSt grades.

In the naphthenic base oils camp, supply continued to slightly outstrip demand, but this was about to change, according to sources. Increased buying appetite, especially in Latin America, together with a turnaround at San Joaquin Refining’s refinery, might result in tighter conditions, although no product shortages were expected. San Joaquin started a planned turnaround at its naphthenic refinery in Bakersfield, California, on Jan. 21. The company will be installing a new vacuum distillation tower and expects the unit to be down for approximately four weeks. Participants expected fewer spot cargoes of pale oils to be available in the interim.

On the paraffinic side, a large Group II facility on the Gulf Coast was anticipated to be taken off-line for a scheduled turnaround this week and was likely to remain down for almost two months, although this could not be confirmed with the producer directly. Spot availability from the producer was expected to be curtailed. A second Group I and Group II producer might start a two week-turnaround at the end of March. A third Group II producer who had originally considered a turnaround in the first quarter has apparently postponed it to the second quarter, but was anticipated to start building inventories over the next couple of months to cover requirements during the outage.

Downstream, at least a couple of major lubricant producers have announced price decreases, reflecting the fall in base oil values. This move might stimulate demand, which in turn might lead to increased base oil requirements, although some sources expressed doubt that this move would affect base oil sales. They said that oil change prices have gone up substantially in 2022 and that is what might ultimately influence automotive lubricant consumption the most. Lubricant prices had moved up throughout 2022 due to climbing base oil values and inflationary pressure, leading to increases on everything from raw materials to transportation and packaging. But lubricant prices started to decline during the last quarter of the year.

According to reports, one major lubricant and grease manufacturer communicated a decrease on lubricants of up to 8%, effective Jan. 12, although the downward adjustment did not apply to automotive gear oils, transmission fluids, industrial gear lubricants, and coolant and fuel additives. Additionally, the producer will increase the price of greases by up to 17%, effective Feb. 13, in response to strained market conditions and the steeper cost of raw materials and packaging.

A second major manufacturer announced a general posted price decrease on select lubricants of up to 8%, which went into effect on Jan. 13. The company also said that the price of grease and selected specialty lubricants will be increased by up to 17%, effective Feb. 13.

Conversely, additive suppliers appeared less amenable to granting discounts, given fairly tight market conditions. While the supply situation has shown a marked improvement over the last four months, there were still pockets of the market where additive supplies were limited.

In other industry news, Saudi Aramco announced the launch of Aramco Trading Americas, as the Saudi company’s trading arm, Aramco Trading Company (ATC), has acquired Motiva Trading and will establish a regional office in Houston, Texas. Aramco Trading Americas will be the sole supplier and offtaker of Motiva Enterprises. For more information, see related story in this issue of Lube Report Americas.

Downstream, crude oil futures inched higher in early trade on Tuesday on hopes of a fuel demand recovery from China and signs of improved business confidence in the U.S. However, West Texas Intermediate values later fell by almost $1.50 per barrel on concerns about a global economic slowdown and as preliminary data reflected higher than expected U.S. crude stocks.

On Jan. 24, West Texas Intermediate March futures settled on the CME at $80.13/barrel, compared to $80.18/bbl for Feb. futures on Jan. 17.

Brent futures for March delivery settled on the CME at $86.13/barrel on Jan. 24, from $85.92/bbl on Jan. 17.

Louisiana Light Sweet crude wholesale spot prices were hovering at $84.62/barrel on Jan. 23, from $82.70/bbl on Jan. 13, according to the Energy Information Administration. There was no trading on Jan. 16 due to the Martin Luther King Jr. holiday.

Gabriela Wheeler can be reached directly at gabriela@LubesnGreases.com.

Posted Paraffinic Base Oil Prices

January 25, 2023

(Prices are FOB basis, in U.S. dollars per gallon and U.S. dollars per metric ton).

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.

*ExxonMobil prices obtained indirectly.

Related Topics

Base Oil Pricing Report    Base Stocks    Market Topics    Other