U.S. Base Oil Price Report


HollyFrontier, Petro-Canada, Safety-Kleen and Avista Oil communicated paraffinic posted price decreases during the week, joining the group of base oil suppliers who have adjusted prices down since late November. A number of naphthenic base oil producers also announced decreases this week. The price revisions were driven by falling crude oil and feedstock prices, together with weaker seasonal demand against plentiful supplies of most grades during the last few weeks of 2023.

Per HollyFrontier Sinclair’s communication, the company’s API Group I postings were lowered by 20 cents/gal on Dec. 8.

Also on Dec. 8, Petro-Canada’s Group II 70, 100 and 200 grades were adjusted down by 30 cents/gal, and its Group II 300/350 and 600/650 base oils by 50 cents/gal. The company’s Group II+ 100 grade decreased by 15 cents/gal, with the Group II+ 65 and Group III cuts remaining unchanged. 

Rerefiner Safety-Kleen reduced the price of its Group II+ RHT120 and RHT240 by 30 cents/gal, effective Dec. 8.

Rerefiner Avista Oil will be reducing the price of its Group II+ base oil by 25 cents/gal but will leave its Group III grade unchanged. The decrease will go into effect on Dec. 18.

Paulsboro had announced 20 cents/gal decreases on its Group I grades last week as well, but the adjustments will be reflected on this week’s Price Table as they go into effect on Dec. 13.

Following the implementation of these initiatives, posted prices for Group I grades will have edged down by 20 cents/gal and Group II grades by 15, 30, 35 and 50 cents/gal, with the heavier grades experiencing the larger markdowns. Some Group II+ prices have slipped by 10 and 15 cents/gal and Group III cuts by 15 cents/gal, although a few suppliers have not adjusted Group III postings at all.

On the naphthenic base oils front, several decrease announcements emerged this week as well.

Ergon announced a decrease in pricing of naphthenic oils in the North American market, effective Dec. 15. The refiner’s HyVolt dielectric fluids will be reduced by 15 cents/gal and its HyPrene process Oils, HyGold base oils and HyPrint ink oils will be reduced by 20 cents/gal.

Process Oils Inc./Cross Oil also informed its customers of a decrease in pricing of naphthenic oils, with an effective date of Dec. 15. The company’s CrossTrans 206 transformer oil price will be reduced by 15 cents/gal and its Corsol L Series and B Series oils will be reduced by 20 cents/gal.

Calumet communicated a price decrease of 20 cents/gal on all of the company’s naphthenic base oil grades, effective Dec. 20.

Aside from a need to lower inventories as producers cannot easily dial down production to adjust to fading demand, a driving factor for the decreases was the downward trend observed in crude oil and feedstock values. While the naphthenic segment appeared tighter in terms of supply than the paraffinic segment given recent planned and unplanned plant shutdowns and steady buying interest for the light grades, both sides of the business were affected by upstream price fluctuations.

Crude oil futures declined over seven consecutive weeks, displaying the longest weekly string of losses since 2018.

On Tuesday, oil futures fell by more than 3% to their lowest level in six months on concerns about oversupply and after U.S. economic data showed an unexpected uptick in consumer prices. “In the U.S., the consumer price index unexpectedly rose in November, further bolstering the view the Federal Reserve was unlikely to cut interest rates early next year,” Reuters reported. Global crude oil demand growth was also expected to slow in 2024, although OPEC+ and the International Energy Agency did not seem to agree on the magnitude of the fall. A draft COP28 climate deal also appeared to have dropped a call to ‘phase out’ fossil fuels.

On Dec. 12, WTI January 2024 futures settled on the CME at $68.61/barrel, compared to $72.32/bbl on Dec. 5.

Brent futures for February 2024 delivery settled on the CME at $73.24/barrel on Dec. 5, from $77.20/bbl on Dec. 5.

Louisiana Light Sweet crude wholesale spot prices were hovering at $73.80 barrel on Dec. 11, from $75.78/bbl on Dec. 4, according to the Energy Information Administration.

Base oil buyers had been requesting temporary voluntary allowances as they had faced difficulties in offsetting the base oil posted price increases implemented back in August and September. While blenders had attempted to implement lubricant and other finished products price increases, many of the initiatives had been partially or completely rescinded as lubricant demand remained sluggish and suppliers risked losing market share. Additive prices had also been increased, adding upward pressure on lubricant prices.

U.S. producers had been able to conclude export transactions in the last quarter, which has helped keep inventories from overflowing, but export prices have been on a downward trend, while freight rates remained firm. Business into Brazil and other destinations in South America and India remained fairly steady, but export volumes of light grades going to Mexico have declined due to the new Mexican import regulations that require a special license to import refined products, including base oils and lubricants. This was likely to put a crimp in U.S. light grades exported to Mexico that were used for fuel blending, freeing more of these grades into the domestic market.

At the same time, some import shipments into the Americas have suffered delays due to a record-breaking lack of rain in Central America, which has forced the Panama Canal Authority to significantly reduce the number of vessels transiting the Canal. 

U.S. exports to Brazil were still described as healthy for Group I and Group II grades, and were expected to continue in the short term as the Brazilian producer Petrobras has completed an extended turnaround and was anticipated to start shipping out product this month, but there were still shortages of some grades noted. A 9,600-metric ton cargo was on the table for shipment from Paulsboro, New Jersey, to Santos and/or Rio de Janeiro, Brazil, in the second half of December. In terms of exports to India, about 5,000 tons to 10,000 tons were being discussed for shipment from Lake Charles, Louisiana, to Mumbai, India, in Dec.

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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