Weekly U.S. Base Oil Price Report


Several paraffinic base oil producers communicated posted price increases during the week, which were precipitated by climbing crude oil and feedstock prices and tighter supply and demand conditions in certain segments of the market. Suppliers on the naphthenic side also stepped out with price increase initiatives driven by similar market fundamentals.

 A few participants were away from their desks this week as they were attending the Independent Lubricant Manufacturers Association Engage conference in Coronado, California.

According to sources, ExxonMobil will increase the posted price of its API Group I, Group II and Group II+ base oils by 35 cents per gallon, with an effective date of April 11.

HollyFrontier communicated a 35 cents/gal increase on all of its Group I grades, effective April 12.

Calumet announced that the company would be increasing its Group I base oil prices by 35 cents/gal, and will also raise its Group II postings, with the Group II 75/80N grade moving up 30 cents/gal, the 100/150N cuts by 40 cents/gal and the 325N grade by 30 cents/gal, with an effective date of April 15.

Motiva communicated posted price increases on all of its Group II base oils, with an effective date of April 15. The company’s Group II 100 will be adjusted up by 40 cents/gal, and its 220 and 600 cuts will be raised by 30 cents/gal.

No increases were announced for the Group II+ and Group III grades.

Paulsboro will be raising the price of its Group I grades by 35 cents/gal as of April 16.

The latest announcements follow a series of posting adjustments that had lifted Group I postings by 20 cents per gallon, Group II prices by 10 to 15 cents/gal, Group II+ by 15 to 20 cents/gal, and Group III values by 10 to 15 cents/gal, depending on the grade and the producer, between March 15 and April 1. Earlier initiatives that had been announced by ExxonMobil and Paulsboro in February appeared to have gone into effect in March as well, after the suppliers had granted temporary value allowances (TVAs) equal to the amount of the increases for thirty days.

Aside from raising prices for most of its Group II grades, Excel Paralubes also lowered the price of its Group II 70 neutral grade by 15 cents/gal on April 1. One U.S. producer and a South Korean supplier had not initiated any posted price adjustments at the time of writing.

Lubricant blenders and finished products manufacturers had originally resisted the base oil price increases because of lower-than-expected downstream demand and the need to offer competitive pricing to protect or gain market share. However, given the increased cost of base oils after the implementation of the latest posted price initiatives, lubricant manufacturers were hoping to raise finished product prices to be able to offset the latest base oil increases. This week, it was heard that Highline Warren had communicated a Group II-based finished lubricant price increase of 15 cents/gal, effective April 29.

On the naphthenic base oils side of the business, Calumet communicated a naphthenic base oils price increase of 30 cents/gal, effective April 15.

According to reports, Ergon will be implementing a 35 cents/gal increase on its pale 60 and transformer oil grades and 30 cents/gal on the heavier viscosities, effective April 19, but this could not be confirmed with the producer directly by the publishing deadline.

Naphthenic base oil prices had also been exposed to upward pressure from steeper crude oil and feedstock prices and a snug supply and demand balance, especially of the light grades used for transformer oils and metalworking fluids. Demand for the heavy-viscosity grades from the rubber and tire segments has also improved on seasonal factors.

Supply in general had also been impacted by a turnaround at Cross Oil’s naphthenic base oil plant in Smackover, Arkansas, that started in early March and was completed at the end of the month. The plant was back up and running at normal rates, according to a company source. The resumption of operations would likely allow for additional volumes to become available in the coming weeks.

Market participants had been keeping an anxious eye on crude oil and vacuum gas oil prices as they have increased substantially over the last few weeks but remained volatile. Crude oil continued to trade at multiple-months highs on geopolitical conflicts in the Middle East and the ongoing Russian war on Ukraine, coupled with prospects of increased demand from the United States and China against continuing oil output curbs by OPEC+ members.

Crude oil futures initially fell on Monday as Israel began to withdraw its troops in Gaza amid hopes that this would lead to a ceasefire, but numbers rose in early trading onTuesday after negotiations between Israel and Hamas broke down in Cairo. However, futures finished the day down as Hamas said that while an Israeli proposal on a ceasefire met none of the demands of Palestinian militant factions, it would study the offer further and deliver its response to mediators, according to Reuters.

On Tuesday, April 9, West Texas Intermediate May 2024 futures settled on the Nymex at $85.23 per barrel, compared to $85.15/bbl for May futures on the CME on April 2.

Brent futures for June 2024 delivery were trading at $89.53/barrel on the ICE on April 9.

Louisiana Light Sweet crude wholesale spot prices were hovering at $90.24/barrel on April 8, from $88.04/bbl on April 1, according to the Energy Information Administration (EIA).

On the base oils export front, with Group I availability deemed tight, suppliers did not feel as much pressure to complete export business as earlier in the year, although they continued to ship out products given rising spot pricing, but Group II suppliers were still very much on the lookout for fresh opportunities. Options included completing shipments to India, Africa, the West Coast of South America, Brazil and Mexico. Details emerged that an 8,000-metric ton cargo had been shipped from Pascagoula, Mississippi, to Mumbai, India, in mid-February on the Stolt Lerk. A 2,000-ton lot was expected to be shipped from the U.S. Gulf to Durban, South Africa, in late April. About 6,000 tons were also expected to be lifted in the U.S. Gulf for shipment to West Coast India during April 20-30. A 2,000-ton cargo was also mentioned for shipment from Houston, Texas, to Guayaquil, Ecuador, in the second half of April.

Buying appetite from some destinations such as Brazil has temporarily declined. Buyers in Brazil appeared to be able to meet requirements by securing domestic base oils, as the main producer has adjusted prices down and output has stabilized, but this could change as demand was anticipated to increase in May and buyers were starting to build inventories for increased activity and a potential tightening of domestic supply in Brazil.

Mexican buyers were also interested in U.S. base oil cargoes, and while exports of the light grades have generally diminished due to stricter import rules related to light base oils used in fuel blending, there were still large quantities of Group I and Group II base stocks moving to the neighboring country as lubricant demand has started showing signs of increasing.

Additionally, Group III supplies in the U.S. were deemed balanced against current demand, but were anticipated to lengthen in a few weeks, once a South Korean producer completes a turnaround and more Middle East cargoes arrive in the Americas because demand at other destinations has declined. Spot prices continued to be exposed to downward pressure due to global oversupply conditions.

SK Enmove’s Group III facilities in South Korea will be undergoing routine maintenance from mid-March until mid-April. This was expected to tighten short-term inventory, although the producer was expected to meet contract commitments because it had built inventories ahead of the turnaround, and its plants in other countries were also running well. Another South Korean Group III producer, S-Oil, has scheduled a turnaround at its Onsan plant in September to October.

In transportation and logistics news, market observers expected price hikes for container transportation as a consequence of the collapse of the Key Bridge in Baltimore, Maryland, after a container ship crashed into one of the bridge’s sections on March 26. The increases were expected because other key U.S. ports were likely to be strained in the short term, creating increased congestion and operational complexities amid a rebound in freight volumes into the U.S. this year, several industry media outlets reported.

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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