This week, Safety-Kleen reported that the rerefiner had increased the price of its Group II+ RHT120 and RHT240 cuts by 40 cents/gal, effective April 12.

Avista Oil informed customers that the company would be increasing its Group II+ ESR50 grade by 40 cents/gal, with an effective date of April 19. “The price change is due to shifting market fundamentals with crude oil, low sulfur vacuum gas oil, and the continued increased demand for re-refined base stocks,” the company explained in a notification.

On the naphthenic side, Ergon confirmed that the company would be raising pricing of naphthenic oils in the North American market, effective April 19. The company’s HyVolt dielectric fluids and 60 viscosity cut will increase by 35 cents/gal and its HyGold base oils and HyPrene process oils will be adjusted up by 30 cents/gal.

Process Oils Inc. announced an increase in pricing of naphthenic oils in the North American market, effective April 19. The company’s CrossTrans 206 and 60 viscosity will increase by 35 cents/gal and its Corsol, L Series and B Series will increase by 30 cents/gal.

San Joaquin Refining will be increasing prices on all naphthenic and aromatic oils by 30 cents/gal, effective April 22. The company explained that the adjustment was due to changing market conditions.

These announcements come on the back of Calumet’s initiative communicated last week, which called for a price increase of 30 cents/gal on all of its naphthenic base oils, effective April 15.

Just like the paraffinic base oil price increases, the naphthenic adjustments were driven by strengthening crude oil and feedstock prices, with additional support coming from 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 shown an uptick as the summer driving season approached.

Lubricant blenders and finished products manufacturers had resisted base oil price increases because of sluggish downstream demand and ongoing competitive pricing activity as suppliers sought to protect or gain market share. In some cases, temporary voluntary allowances or delayed implementation have been granted. However, given the increased cost of base oils after the latest posted price initiatives, lubricant manufacturers were hoping to raise finished product prices to be able to offset the steeper base oil values. A number of suppliers intended to increase prices in late April to early May, while an additive supplier was also heard to be planning to increase prices in May, although it was also heard that major blenders have not initiated any increases.

On the base oils export front, prices were exposed to upward pressure due to tighter supplies and ongoing buying interest. The Group I grades were deemed on the snug side, so fewer shipments were expected to take place, but Group II cargoes were still plentiful and several transactions were likely to be completed. There have been a number of discussions involving U.S. and Canadian parcels for late April and May shipment. A 6,000-metric ton cargo was mentioned for possible shipment from the U.S. Gulf to El Dekheila, Egypt, in May. A 6,000-ton lot made up of two base oil grades was quoted for shipment from Houston, Texas, to Mumbai, India, in late April to early May. In Canada, a 2,500-ton parcel was expected to be shipped from Mississauga, Ontario, to Antwerp, Belgium, in mid-April.

Buying appetite Brazil was expected to pick up on seasonal factors and a draw-down of existing inventories. Aside from inquiries for U.S. cargoes, there have been competitive offers of Asian products to Brazilian ports. A 4,500-ton cargo was discussed for shipment from Ulsan, South Korea, to Rio de Janeiro in the first half of May.

Mexican buyers continued to express interest in U.S. base oil cargoes, and while exports of the light grades have generally dwindled given the stricter import rules related to light base oils used in fuel blending, several cargoes made up of Group I and Group II base stocks were expected to be finalized for second half of April and May lifting. Offer levels were heard to have climbed on the back of domestic posted price increases in the U.S. However, given plentiful availability of U.S. material at the border, some buyers preferred to wait and see whether spot prices would fall.

Group III supplies in the U.S. were deemed slightly long against demand. Availability was expected to lengthen further as a South Korean producer was about to complete a turnaround at its plant in South Korea and more Middle East cargoes became available to ship to the Americas because demand at other destinations has weakened. This situation was exacerbated given the fact that domestic suppliers with the ability to switch output were favoring the production of Group III grades over Group II given more favorable margins and the abundance of Group II cargoes. Spot prices continued to be exposed to downward pressure due to global oversupply conditions.

SK Enmove’s Group III facilities in South Korea have been undergoing routine maintenance from mid March, but were expected to be restarted in mid April. The turnaround has likely tightened short-term inventory, but the producer was expected to meet contract commitments as it had built inventories ahead of the turnaround and its plants in other countries were also supporting supply. Another South Korean Group III producer, S-Oil, has scheduled a turnaround at its Onsan plant in September/October.

Market participants were also monitoring developments in the Middle East, as Iranian drone attacks on Israeli targets in response to an Israeli strike on the Iranian embassy in Damascus last week might lead to an escalation of the conflict between Israel and Hamas, affecting crude oil production in the region. Concerns that Iran would respond to the strike helped send Brent futures to $92.18 per barrel on Friday–the highest level since October. However, futures fell on Monday and Tuesday after Iran’s attack on Israel proved to be less intense than anticipated, and the White House’s opposition to an Israeli counterattack against Iran was expected to help de-escalate the standoff, Reuters reported.

Additionally, stronger-than-expected U.S. retail sales for March further reinforced expectations that the U.S. Federal Reserve was unlikely to cut interest rates soon, which might dampen oil demand.

On Tuesday, April 16, West Texas Intermediate (WTI) May 2024 futures settled on the Nymex at $85.36 per barrel, compared to $85.23/bbl on April 9.

Brent futures for June 2024 delivery were trading on the ICE at $89.77 on April 16, compared to $89.53/barrel on April 9.

Louisiana Light Sweet crude wholesale spot prices were hovering at $89.11/barrel on April 15, from $90.24/bbl on April 8, according to the Energy Information Administration (EIA).

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.